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TRANSCRIPT OF PROCEEDINGS

ROUNDTABLE DISCUSSIONS ANCSA & 1991 VOLUME XXI ANCHORAGE

NOVEMBER 15, 1984

Alaska Native Review CommissionHON. THOMAS R. BERGER

COMMISSIONER

TRANSCRIPT OF PROCEEDINGSROUNDTABLE DISCUSSIONS

ANCSA & 1991 VOLUME XXI ANCHORAGE

NOVEMBER 15, 1984

Transcripts of the Alaska Native Review Commission are produced in t̂ wo series.Those in Roman numerals are for the Roundtable Discussions. Those in Arabic numbers are for the Village Meetings.

All original transcripts, audio tapes and other material of the Alaska Native Review Commission are to be archived at the Elmer E. Rasmuson Library, University of Alaska, Fairbanks, Alaska 99701.

Acknowledgement: This Roundtable was made possible by a grant from the Alaska Humanities Forum and through the Gifts and Matching Program of the National Endowment for the Humanities.

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TABLE OF CONTENTSNOVEMBER 15, 1984

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Mr. Berger Speaks----Mr. Fessler Speaks---Mr. C. Johnson Speaks-Mr. Berger Speaks----Mr. Fredericks Speaks- Mr. C. Johnson Speaks- Mr. C. Johnson Speaks-Mr. Berger Speaks-----Mr. Price Speaks------Mr. Berger Speaks----Mr. Case Speaks-------Mr. C. Johnson Speaks- Ms. E. Johnston SpeaksMr. Berger Speaks-----Mr. Price Speaks------Mr. Berger Speaks----Ms. E. Johnston SpeaksMr. Price Speaks------Ms. E. Johnston SpeaksMr. Berger Speaks----Mr. C. Johnson Speaks-Mr. Berger Speaks-----Ms. E. Johnston SpeaksMr. Berger Speaks-----Mr. Fessler Speaks---Mr. Price Speaks------Mr. Berger Speaks-----Mr. Fessler Speaks----Mr. Price Speaks------Mr. Fessler Speaks----

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Mr. Berger Speaks----------- ----------------------Ms. E. Johnston Speaks---------------------------Mr. Fessler Speaks-------------------------------Mr. Berger Speaks--------------------------------Mr. Fessler Speaks-------------------------------Mr. Price Speaks----------------------------------Mr. Fessler Speaks-------------------------------Mr. Price Speaks----------------- ---------_______Mr. C. Johnson Speaks---------------- --------- -Mr. Berger Speaks-------------------- ------------Mr. Dementieff Speaks---------------------- -------Mr. Fessler Speaks---- ------------------ ----- --Mr. Price Speaks-----------— --------- -—Mr. Berger Speaks— ■■— ------— ------------- ■----Ms. E . Johnston Speaks---------------------------Overlap Tape, Side B-?---------------------------Tape 5, Side B-----------------------------------Mr. Dementieff Speaks------------------- ---------Mr. Fessler Speaks---- ---- --------------------Mr. Berger Speaks---------------- ---------- ------Mr. Price Speaks--------------- ■-■--------------- -Ms. E . Johnston Speaks-------------------------- ■Mr. Price Speaks-- ------------------ ---------------Mr. Berger Speaks-------------- ------- ---------- - —Mr. Dementieff Speaks------------------- ---------Mr. Fessler Speaks--- ---------- ------------------Ms. E . Johnston Speaks-'— ------ ---------■Mr. Berger Speaks------------------------------- — ■Mr. Case Speaks---------------- -------------------Mr. Fessler Speaks--- -----------------------------Mr. Fessler Speaks--------------------------------

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Mr. Case Speaks------------------------------------- -Mr. Berger Speaks------------------------ ---------- — -Mr. Berger Speaks---- ---------- ----*----------- ------Mr. C. Johnson Speaks--------------------------------Ms. E. Johnston Speaks-------------------------------Ms. M. Johnson Speaks-- ------------------------------Ms. E. Johnston Speaks-------------------------------Mr. Berger Speaks------------------------------------Mr. C. Johnson Speaks--------------------------------Mr. Berger Speaks------------------------------------Mr. Price Speaks-------------------------------------Mr c\m Johnson Spsctks- —--- 1 ----- - — - — — — — — — = = = — = = —Ms. E. Johnston Speaks-------------------------------Mr. Berger Speaks------------------------------------Mr. Johnson Speaks---------------------- --------------Mr. Price Speaks-------------------- r----------------Mr. Berger Speaks------------------------------------Ms. M. Johnson Speaks--------------------------------Mr. C. Johnson Speaks--------------------------------Mr. Berger Speaks-------------------- ---------------Ms. E. Johnston Speaks-------------------------------Mr. Berger Speaks------------------------------------Mr. Garber Speaks------------------------------------Mr. Berger Speaks------------------------------------Mr. Strong Speaks-------------------------------------Mr. C. Johnson Speaks---------------------------------Mr. Strong Speaks-------------------------------------Mr. Berger Speaks------------------------------------Mr. Anders Speaks-------------------------------------Mr. Berger Speaks-------------------------------------Mr. R. Johnson Speaks---------------------------------

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Mr. Fessler Speaks------------------- ■--- -Mr. Case Speaks----------------------------Mr. Berger Speaks--------------------------Mr. Case Speaks----------------------------Mr. Fessler Speaks-------------------------Mr. Berger Speaks---------------------------Mr. C. Johnson Speaks-------------- -------Mr. Strong Speaks----------- ----------------Mr. Berger Speaks--- ■■---- ---------Mr. Strong Speaks------- --------- -Mr. Berger Speaks----------------------Overlap Tape, Side B-------■ ---------------Tape 6, Side A------ --------- -— -- ------- —Mr. Garber Speaks---- -------- ------- ----- -Mr. Berger Speaks-- ----- -------------------Mr. Dementieff Speaks--------------------- -Mr. Berger Speaks----------------------- ■-Mr. Fessler Speaks---- ----------- -------- —Mr. Berger Speaks------------------- --- ----Mr. Strong Speaks--------------------------Mr. Fredericks Speaks--- ------------ ------Mr. Taylor Speaks---- ----------------------Mr. Berger Speaks---------------- ----------Mr. Anders Speaks----------------- ---------Mr. Berger Speaks--------------------------Ms. E. Johnston Speaks— -------------------Mr. Berger Speaks----------------------- ■Mr. Garber Speaks------------ ---------------Mr. Taylor Speaks--------------------------Mr. Fessler Speaks-------------------------Mr. Berger Speaks--------------------------

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Mr. Fessler Speaks---Mr. C. Johnson Speaks -Mr. Berger Speaks----Mr. Fessler Speaks---Mr. C. Johnson Speaks-Mr. Berger Speaks----Mr. Strong Speaks----Mr. Berger Speaks----Mr. Case Speaks-------Mr. Garber Speaks----Mr. Berger Speaks----Mr. C. Johnson Speaks - Ms. E. Johnston Speaks Mr. C. Johnson Speaks-Mr. Berger Speaks----Mr. Fredericks Speaks-Mr. Berger Speaks----Mr. Anders Speaks----Mr. C. Johnson Speaks-Mr. Berger Speaks----Ms. E. Johnston Speaks Mr. C. Johnson Speaks-Mr. Strong Speaks----Ms. C. Johnson Speaks-Mr. Berger Speaks----Mr. Garber Speaks----Overlap Tape, Side B--Mr. Garber Speaks----Tape 6, Side B--------Mr. Garber Speaks----Mr. C. Johnson Speaks-

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Mr. Berger Speaks--- ------------------------------Mr. Fessler Speaks----------------- --------------Mr. C. Johnson Speaks----------------------------Mr. Fessler Speaks-------------------- -----------Mr. Fessler Speaks-'------------------------------Mr. Berger Speaks---------------------------------Mr. C. Johnson Speaks----- ------------ ---------Mr. Johnson Speaks------------- -------------- ---Mr. Berger Speaks--------- -— --------------— ■Mr. C. Johnson Speaks----- ----------- ---------- ■ —Mr. Anders Speaks------------------ --------------Mr. Berger Speaks--- -------- ------------- ■ -- -Mr. Price Speaks ---- ----------- -----— --Mr. Case Speaks------------— ----------------- —Mr. Price Speaks---------------------------------Mr. Berger Speaks--------------------------------Mr. C. Johnson Speaks----------------------------Mr. Berger Speaks----------------------- ---------Ms. M. Johnson Speaks-- -------------------------Adj ourns-----------------------------------------Reconvenes-----------------------------------------Mr. Fessler Speaks------.--- ----------- ------------Mr. Berger Speaks---------------------------------Ms. E. Johnston Speaks---------------------------Mr. Berger Speaks------------ --------------------Mr. Berger Speaks--- ---------- --------- -----------■Ms. E. Johnston Speaks--- -----------------— -------Mr. Fessler Speaks--------------------------------Mr. Berger Speaks---------------------------------Mr. R. Johnson Speaks----------------------------Mr. Berger Speaks---------------------------------

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Mr. Case Speaks-------Mr. Fessler Speaks----Mr. E. Johnston SpeaksMr. Shanks Speaks-----Mr. Berger Speaks----Mr. Shanks Speaks----Mr. Berger Speaks----Mr. Fessler Speaks---Mr. R. Johnson Speaks- Overlap Tape, Side B--Tape 7, Side A--------Mr. R. Johnson Speaks -Mr. Berger Speaks----Ms. E. Johnston SpeaksMr. Garber Speaks-----Mr. Dementieff Speaks-Mr. Fessler Speaks----Mr. Berger Speaks-----Mr. Fessler Speaks----Mr. Berger Speaks-----Mr. Garber Speaks-----Mr. Fessler Speaks----Mr. Fredericks Speaks--Mr. Fessler Speaks----Mr. Berger Speaks-----Mr. Fessler Speaks----Mr. R. Johnson Speaks--Mr. Strong Speaks-----Mr. Case Speaks-------Mr. Berger Speaks-----Ms. M. Johnson Speaks--

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Mr. Dementieff Speaks----- --------------------- —Mr. Berger Speaks-------- ’---------------------- -—Ms. M. Johnson Speaks----------------------------- -Mr. Berger Speaks------------- ---------------- ---Mr. Case Speaks------------------- ---------- ------Mr. Dementieff Speaks----------------------------Mr. Case Speaks---- ■-------- ---------------------Mr. Berger Speaks------------------------ --------Mr. Shanks Speaks------------ -----------------— —Mr. Case Speaks;--- ------------ --------- --■-------Mr. Shanks Speaks----------- --------- - — --■ ---Mr. Dementieff Speaks -----------— ■--— -------Mr. Fessler Speaks--— -----------------— •--- ■ —Mr. Dementieff Speaks-------------— — ■---Mr. Garber Speaks----- ---------------------------Ms. E. Johnston Speaks--- --------------------- --■Mr. Berger Speaks---------- -----------------------Ms. E. Johnston Speaks--- ---------------- --------Ms. E. Johnston Speaks---------- ------------- -----Mr. Berger Speaks------ ---------------- ■---------Overlap Tape, Side B----- ------------------- ------Tape 7, Side B----------- ----------- ---------------Ms. E. Johnston Speaks----------------------------Mr. Berger Speaks------------- ---■---------- ------Mr. Shanks Speaks---- ------------------------ ---Mr. Fredericks Speaks-----------------------------Mr. Shanks Speaks---------------- ----------- ----Mr. Berger Speaks----------------------------------Ms. Maher Speaks----------------------------------Mr. Anders Speaks---------------------------------Mr. Berger Speaks---------------------------------



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Mr. Case Speaks------Mr. Berger Speaks---Mr. Garber Speaks---Mr. Shanks Speaks---Ms. Maher Speaks----Mr. Shanks Speaks---Ms. Maher Speaks----Mr. Dementieff SpeaksMr. Berger Speaks---Mr. Shanks Speaks---Mr. Berger Speaks---Mr. Strong Speaks---Mr'. Berger Speaks---Mr. Strong Speaks---Mr. Fessler Speaks--Mr. Strong Speaks---Mr. Fessler Speaks--Mr. Strong Speaks---Mr. Garber Speaks---Mr. Strong Speaks---Mr. Anders Speaks---Mr. Garber Speaks---Mr. Shanks Speaks---Mr. Berger Speaks---Mr. Fessler Speaks--Mr. Berger Speaks----Mr. Fessler Speaks---Mr. Fredericks SpeaksMr. Fessler Speaks---Mr. Fessler Speaks---Mr. Fredericks Speaks



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Mr. Berger Speaks-- ---------- -— ------- ------------------ ------2214Mr. Fessler Speaks-------------------------------------------- 2214Overlap Tape---------------------------------------------------2214Tape 8, Side A ------------------ 2214Ms. Maher Speaks---------------------------------------------- 2214Mr. Garber Speaks--------------------------------------------- 2214Mr. Berger Speaks--------------------------------------------- 2215Ms. Maher Speaks--------- ----- --------------------- - - - -— ■ - • 2215Mr. Case Speaks--- -— ------------------------- --------- ------2215Ms. M. Johnson Speaks----------- 2215Ms. Maher Speaks--- ---------- ■--2216Mr. Berger Speaks-- ------------------- _______________-- ______2216Mr. Case Speaks-----------------— ------- -2216Mr. Hageman Speaks------------------------------______-----'--2217Mr. Berger Speaks-------------------------------------- -•-----2217Hearing Adjourned------------------------------------------ ---2218



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(NOVEMBER 15, 1984) (TAPE 5, SIDE A)

MR. BERGER: Let's take ourseats, I think everybody's here. We introduced ourselves yesterday; we have two new arrivals today. Rose Marie Maher of Northway, and you're President of a village corporation there.We welcome you! Daniel Fessler, who is advisor to the State's Statutory Law Revision Committee, and is working on and developing the new corporate code from the state. I don't have my notes in front of me, but Mr. Fessler, you're from California, the University of...?

MR. FESSLER: University ofCalifornia at Davis.

MR. BERGER: At Davis — right.Well, we welcome you, too, sir. And I think that we can begin. Yesterday we had some general discussion about 1991 and its implications and John Taylor and Paul Goodwin and others talked about what would happen if there were no changes in the legislation. We also discussed, towards the end of the day, some of the remedies that might be adopted to insure that Native corporations and Native land remain under Native control. A number of suggestions were made. It was suggested by Elizabeth Johnston, for instance, that the only way to insure that Native corporations remain in Native hands, was to restrict the transfer of shares. Glen Fredericks, speaking for the Kuskokwim Corporation, with 1200 shareholders in the Bush, said that their principal concern is to insure that the land remains in the Native hands and Glen Fredericks said that he thought the key thing was to separate the land from the corporation, so that if the corporation got into hot water, the land would be safe, and we discussed that. I took the liberty of suggesting at the end of day, that all that I had found at the meetings I've been holding in villages was that, people were regarding land and the



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safekeeping of Native land for future generations as the paramount consideration, and I suggested that the schemes being considered to address 1991 had to meet three criteria: that is,that they had to protect.the land against corporate failure, against corporate takeovers, and against taxation of subsistence or underdeveloped land by the state.

and we thought this afternoon, we would ask the village people to talk about 1991 from their point of view; but, I asked Charlie Johnson if he would lead the discussion this morning, lead off, and after Charlie, we'll ask Monroe Price, and Elizabeth Johnston, if we may, to comment on the AFN resolutions because both of them have had something to do with putting them together, as I understand it. So Charlie, why don't you start off.

Let me give a little background as to how these resolutions were developed. We started out about three years ago, in 1981, we had some discussions amongst us, amongst the board members and people at AFN, and corporations on -- it was kind of informal between different people of, "What we're going to do about 1991?" and that ended up in a retreat in Kotzebue, that summer in 1981. The point of the discussion at the time -- we went through about two days of discussing some of the points that Bart discussed when he opened up the meeting here yesterday, is "What are we, and what do we want to be?" We talked a lot about the conflicts that are kind of inherent in us, because of the way the Land Claims Act is written up. A lot of discussion about, "Are we really being Native by accepting the corporate mode? Is there some other form that's more suitable to Natives? How are we going to remain Natives? How are we going to protect the land?" And that was our first meeting. It lasted for two days. It was a very good opening discussion, I felt, and I think those who participated felt that way, and that led to a series of more discussions and retreats. And we've held now approximately, eight or nine

So we're ready to look at the AFN resolutions today,

MR. C. JOHNSON: Okay, thank you.



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retreats. A couple of them here in Anchorage, but usually we try to go to places like Cordova or Kodiak or Kotzebue, and go over points of how we wanted and how we felt and where we felt that our future should be. "What were we going to do with the Land Claims Act. Does it need changing?" We went through all these questions. One of the things that we did was, last year at the AFN Convention, we introduced some general principles that were adopted by the Convention about how we should address 1991, and the changes. The resolutions that we have, and we presented at this year's convention, we presented not specifically as you see them and for those of you that have this paper in front of you, it lists those resolutions. At these retreats, we kind of drafted them in principle or stated them, and then we gave them to the attorneys and they deteriorated. I mean not deteriorated them, we compressed them into these resolutions that were more technical I guess, and more specific. At this year's convention what we did was, we did not adopt these resolutions. What we did was adopt a process that was supported by the delegates to the conventions, that before we adopted specific resolutions to ask for specific legislation, that at first we needed to go out to the villages, and the regions and get responses from our people on how. they felt about these specific ideas. And after that, we would hold another convention, a special convention in March of next spring, and formally adopt them as AFN, and then take them to Congress, with specific legislation that we were going to be asking for. We've discussed this, by the way, with our Congressional delegation and at the convention got a very strong commitment from Senator Stevens that he would do everything possible in his power to insure that the resolutions that was placed at our convention, that he would introduce them and do everything he could to see that they passed. So the process that we're going through now is, we're going to take these out to the regions, each of the regions is ...are going out to the villages



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and get some response on the specific resolutions and then we're going to come back.in March.

Okay, additionally what we're also trying to do is to involve more directly the villages in the convention and the decisions at AFN, so what we've also done is we've appointed a committee, made up of members of both the profit and nonprofit side to start working on how to involve the villages more. Additionally what we're doing, is we've asked each of the regions along with the AFN, both profits and non-profits, to sponsor a meeting of its village corporations to select not only the village corporation but the IRA councils and traditional councils as well, to select some people to come to a January meeting, and that January meeting here in Anchorage would be of primarily village people for them to select somebody to work with the AFN appointed committee to draw plans on how to include more directly the villages, both IRA's and corporations, in the process that AFN is going through. We felt that 1991 issue is the ideal situation for us to correlate that participation that we need from the villages if we're in fact going to be effective in representing the entire Native population. So that's basically the process that we've set out to do at AFN with addressing these specific resolutions that you see. In the retreats, we centered on the issues that I'm sure that most of you have heard of, that is basically, how do we protect our land? How do we keep the corporations and the land under Native control? How do we benefit the elders? How do we include those born after 1971? Those specific or those general areas are where we concentrated. We had some lively discussions on some of these issues. We had some differences obviously, because of the differences of the makeup of the different regions. And the wording on the resolutions, which really provide options rather than dictating specific actions -- it really just provides options for each region to take, was really finally what unified us, as the 12 or 13 you know, diverse regions. At first, we were talking in our



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ear ly meetings of, in fact we would put in restrictions on land. We would put in restrictions on non-Natives, and things like that and we ran into a lot of problems getting together on these issues. When we finally decided, and w e ’re kind of pushed into really making them options, rather than specific restrictions that automatic. Then at last we got unified on supporting the resolutions that -- that we will present to the villages. So each of the resolutions that we have put together are options, rather than specific, directed courses of Actions. So with that, I can -- unless Glen wants to add something or Marlene, because they participated heavily, and so did Liz. And these, -- some of these discussions we can go to the specific resolutions.

MR. BERGER: Glen, Marlene.Anything to add?

MR. FREDERICKS: Only thing thatI would add is that we did stress options. And I think what Charlie is saying is very true. And I know myself, from the village, I wanted that option. And Charlie says, we had some heated arguments, but I think that is the way to go.

MR. C. JOHNSON: Okay, if youwant to go over the specific resolutions. In this...

MR. BERGER: Just before you dothat Charlie, could I ask a question? You mentioned the 13th region. Were they part of this, if you ... if I may ask?

MR. C. JOHNSON: We invited the13th to each of the retreats. They did participate in one or two. I can't remember which specific ones, but they did participate. And the resolutions address, not only the 12 regions in Alaska, but also the 13th, because they are an ANCSA corporation, and it provides them, although everything doesn't apply to them, obviously, because they don't have land to... we've asked for ANILCA protections of land. Of course those things would not apply to the 13th. However, I think such things



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as stock alienation, and other things would apply and so we did ask their participation.

MR. BERGER: Well,.why don't youstart off with the first one, and then we can perhaps discuss them one by one.

MR. C. JOHNSON: Okay, in thisprintout that you see here, if you open to the very center of the thing, and open it up. It just has headlines that says "1991 Resolutions", and this is a printout that was put out by Tundra Times. The first resolution specifically sets out, I think, a process that affects all of them. And that is, that changes or options, rather than being accepted by a Board will be accepted by the stockholders, and I can read you the resolved: "Now,therefore, be resolved that the AFN, [in] convention assemble [d] endorses the concept that whenever a corporation is given an option with regard to a concept, that that option shall be exercised by vote of the shareholders. Be it resolved, that the Board of Directors of each corporation shall establish a minimum shareholder vote to exercise the option, but the minimum votes shall not be less than the majority of a quorum of shareholders. No dissenters' rights to stock purchased, repurchased by the corporation shall be available if a corporation exercises an option."

Maybe I should let Monroe, or somebody who is an attorney, discuss what the real effect of this is, but one of the things that we discussed at these retreats was that anything that needs to be done has to be done by the stockholders, rather than by the Board, and I think that's really the intent of the first one.

(Indiscernible)MR. PRICE: Well, I just say

that, as I recall, there was some disagreement about what level of shareholders' support there should be for the approval of removing restrictions or other aspects of the, as it might

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ultimately turn out. And the question was, "Should the resolutions set a minimum -- a mandatory shareholder vote percentage for all corporations? Should it be different for different options? Who should decide? -- Congress, the board, etcetera, etcetera, and this is the result.

refresh my recollection. What's the likely quorum to be, in a particular corporation? Are we talking 50 percent of all shareholders, one-third, 10 percent; what's the range of possibility?

most of the quorums of the corporation is one-half plus one, but you know, that was not specifically discussed or argued at any point. There was, however, some discussion as Monroe stated, at .what level of -- what number or percentage of stockholders should vote on some of these specific things? Now, as you know, in corporations, it is often very difficult to get stockholders to vote. In my corporation, we have a quorum of one-half plus one. Lately, we have not had any problems getting a quorum. Our average turnout has been 52 percent. This last election we had a 66 percent turnout, and the reason we had such a. large turnout, we were discussing changing the structure of the Board to give villages more representation on our Board, and so consequently we had a much larger turnout, and much more interest generated; but in the past -- well, the last few years we have not had a problem getting a quorum. It has been a half plus one. I know, before,I was on either the Board or in the presidency, we've had to delay our meetings as much as thirty days in order to get quorums.

MR. BERGER: David Case.MR. CASE: Maybe one of you can

MR. C. JOHNSON: Well, I think

MR. CASE: What's the minimumquorum permitted?

(Indiscernible)



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MS. E. JOHNSTON: The minimumquorum permitted in the state is one-third, and some of the Native corporations do have a quorum requirement that is as low as one-third, which means of course, if it’s a majority of the quorum, it would be as was alluded to yesterday, that you could have as low as a figure as 17 percent, making this kind of corporate decision, which is somewhat intended with the general views of good corporate governance.

The second thing that's in this, as Charlie mentioned, it was an effort to solve the fact that among the corporations, themselves, there were different views on how this can be handled, and now wishing Congress itself to set this. By letting the Board set it, you have an interesting phenomenon, which is the Board itself can decide then, out of two through eight, which of those resolutions the Board itself thinks are hunky-dory, and which there are not so good, and have different requirements for different ones. It's also a resolution that has hidden in it the possibility of great movement of power, from shareholder to the Board, and that is in there, and I think it should be seriously ' considered as a problem.

MR. BERGER: Well, you caught ourattention, I think. Could you explain a little bit what you meant by that last remark.

MS. E. JOHNSTON: Okay, if aBoard of Directors is the one to set the requirements for what the standards of passage are, and as you know, in corporate law you could again, again you could go as low as a majority of the quorum, which I've indicated in the Cook Inlet situation, might be your 17 percent figure, that would an affirmative, could go as low as that or it could go as high as some of the super-majority requirements that can be established in corporate law, like 90 percent.

If I, as a Board member, am permitted, if I say, as the body of the Board, am I permitted the discretion on each of the



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resolutions to set figures that go all the way from 17 percent up to 90 percent; then I myself, as the body of the Board, can almost fix the race. Okay -- if I tell you how high you have to jump, before you can pass some of these things, I can, you know, some of us can (only) jump so high. Charlie, I think, was extremely accurate on the fact that some places have difficulties in getting some certain levels of participation. So you do have a problem, a reality problem, that this is trying to deal with, but I'm just warning you of the abuse problem that's here, too, which is the potential of the abuse of the Board of Directors setting different standards for passages based on whether they wanted it to pass or not. And, that I think is a problem.

MR. PRICE: I would like to askyou just one question, without...

MR. BERGER: Monroe Price. I'monly stating the names of people for the record.

MR. PRICE: ...okay, withoutlegislation, wouldn't the Board generally, if the Board wanted to under State law... what is the discretion of the Board to set the maj ority?

MS. E. JOHNSTON: Monroe, I thinkit depends on the kind of resolutions...

MR. PRICE: ...the issuesinvolved here.

MS. E. JOHNSTON: Well, no, itdepends on the issues involved. In other words, let me do straight corporate law, and you can draw your analogies perhaps even better than I can. In straight corporate law, as it exists today, when you have a significant event, and we talked about the definitions yesterday a little, of what might be significant events: mergers, dissolutions, sale of all or substantially allof the assets. These type of major corporate events that alter, in a significant fashion, what's going on in that corporation, when you get those kind of significant corporate events, State



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law has said two-thirds. When the AFN and the Native community has gone to Congress for similar types of significant events, they've gone for a majority of the outstanding shares. Okay, so when the Native community went before the Congress for the merger issue, which is the significant corporate event that alters the rules of the game, and alters significantly what's going on, as opposed to voting on whose going to be elected director, or this type of thing. The standard that was passed at the Congressional level for that significant event, was a majority of the outstanding shares, which is similar to what Charlie was referring to, 50 percent plus 1.

MR. PRICE: Where would you put,just to jump ahead for a moment -- removal of restrictions on the sale of stock, under State law if there were, if there were a State law equivalent.

MS. E. JOHNSTON: Since rightnow, the law is, that in 1991 there will be no restrictions on stock, I would say that for a corporation to apply those restrictions, I would say that's an extremely significant corporative event. And I would argue for a majority of the outstanding shares. But, I want to tell you, who cares what I would argue? What I really want to point out to you is the danger of the Board having the power because of the potential for abuse, of the Board setting different standards, based on the what the Board wants, having nothing to do with what the shareholders want. That's really what I'm trying to address.

MR. BERGER: CharlieJohnson.

MR. C. JOHNSON: You know, you'remaking some assumptions, that the Board is, is generally not acting in the best interest of the stockholders. And I don't think that's a very accurate assumption. You're assuming that the Board is going to use the powers that it already has, to perpetuate itself or to perhaps not act in the best interest of



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the stockholders. Now going back to the history of ANCSA corporation and why only a majority of stockholders, rather than two-thirds as is required in normal corporations, and the reason for that is, you take a normal corporation and there * s always some concentration of stock and major blocks of stock, that makes it much easier to, to get the type of participation that's required in major events. With Native corporations, when we all almost have, at least we started out with all having, the same amount of stock, it becomes a popular vote rather than a vote of the concentration of shares, and even in the normal corporation like we're all involved in corporations other ANCSA corporations. I know for instance on one corporation I'm involved in where less than about ten percent of the shareholders can in fact vote the two-thirds majority that is required because of the concentration of stock, but I seem to have... I have problems with your assumption that the Boards will utilize the powers they already have, not in the best interest of the stockholders.

MR. BERGER: Elizabeth, then DanFessler.

MS. E. JOHNSTON: Charlie,don't -- I'm not assuming that the Board will or will not do a certain thing; what I am is a lawyer, and as a .lawyer I try never to give groups more power than is needed to accomplish a task, and I certainly always try to pay attention to any powers that are uncurbed, and I represent management, so I suppose it's somewhat ironic for me to be arguing that this kind of power should not given to the Board of Directors. I'm just suggesting to you in general corporate law, this is not a power that is given to the Board of Directors, and I consider it a danger not because I consider Native Boards, in general, unresponsive to their shareholders, but because I'm a lawyer, and I know what unfettered power is, and does, and I think it's a mistake, and that's just because my background, and lawyers tend to be



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suspicious creatures, and that's just -- you should accept that as part of my background.

wanted to add something.MR. BERGER: Dan Fessler, you

MR. FESSLER: Well, I'll begin byconfessing that I'm also a lawyer. I'm also a school teacher, and so maybe I'm at odds with -- internally. I think it might help if we put this discussion in a more general concept. As I understand it, and any assumption that I articulate that's wrong, please, no one hesitate to correct me. The idea to have the fruits of the Native settlement devolve upon corporations was something which was pretty well thrusted upon the Native population. The corporation has not been used in this manner-to my knowledge.

MR. PRICE: I think that firstassumption is subject to question.

(Indiscernible)MR. FESSLER: Okay.(Indiscernible)MR. FESSLER: The corporation

used -- in the manner of suddenly saying these would be the corporate assets, and this group of individuals will be the shareholders, and the shares will be distributed to these individuals by virtue of their being identified as the Natives in the State of Alaska, is a fairly unique phenomenon.

The idea of Congress was that the corporations were to be created under the Alaska's corporation law. Alaska's corporation law in 1971, as it is today, was essentially taken by the first Alaska legislature from the corporation law as it then existed in the State of Oregon. In other words, on the day that Alaska became a State, it suddenly had to pass laws on all manner of matters that had heretofore been regulated by Congress Act.And so what they decided to do was to look to the law of the State of Oregon; now that's where we got our existing corporation



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law from. Under the existing corporation law the control and management of the corporation is legally envisioned as being lodged with the Board of Directors. Shareholders are envisioned as having an essentially passive role. Their one major prerogative, under the corporation code of the State of Alaska, is to elect Directors. Beyond that, the only time the Board of Directors has to go to the shareholders, under existing law, for the purpose of ascertaining whether they consent is if the shareholders, excuse me, if there is a desire to amend the content of the Articles of Incorporation. That cannot be done by the Board alone, if there is a desire to take the corporation through what is generically called an "organic change" which is what Liz was indicating when we were talking about mergers, consolidations, stock— sale of all the stock, transfer of of all the assets other than ordinary course. There the law protects the shareholders, recognizing that after one of those transactions, you're going to be the shareholders in a fundamentally altered institution.

Now those are the essential features of the law, and so whether or not you have, and I can't tell when we talk here, and Charlie about decisions. In other words if there are options that devolve upon the corporations, the issue, put in its most easily understood fashion which is the only way I understand these, is whether or not it is akin to one of those organic changes, in which case, shareholders could say "we have a statutory right to be consulted", or whether or not it would amount to essentially altering the content of the Articles of Incorporation of the given corporation, in which case the shareholders could say, "we have a legal right to participate in that decision, the Board isn't competent to do it alone". But failing that, the status quo is that the Board has the power, and if the shareholders don't like the decision then infer one elects new people to the Board, hopefully, people who will be able to reverse the decisions that the shareholders find distasteful.



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But, there is a way within all your corporations at the present time, without going beyond your corporation, in other words, without having to go to AFN, let alone to the Alaska legislature, and certainly not to the Congress of the United States, and ask them to do you a big favor, in which you could protect yourself.

I don't know what types of Articles of Incorporation are common in the regional corporation nor what types of Articles of Incorporation are found in many of the village corporations, but it would be possible for you to use the Articles of Incorporation to define areas of great interest to the shareholders wherein you want to arrive at a status quo position, and you wish to make it difficult to change that decision,' by simply enshrining whatever position you want to have, in the Articles of Incorporation. And one of the things you can do in the Articles of Incorporation is raise the percentage necessary to vote on changing the Articles of Incorporation, and you have the power right now under the law to do those things to protect yourselves. You don't need...

MR. BERGER: Where does the powerreside, the Board or the shareholders?

MR FESSLER: ...Right now, inorder to do this you have to change the articles. This will require, therefore, the cooperation of the incumbent board and the shareholders. Neither institution, the Board nor the shareholders, has the power to amend the articles.

MR. BERGER: Right.MR. FESSLER: Together, they do,

and having amended the articles, you can set the terms under which in the future those articles can be changed beyond those amendments. And you can very discriminatory. You do not have to lock your corporation up with 90 percent voting requirements for all changes to the articles, you can bullet particular provisions of the articles, and say, "as to these we will require 90 percent



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voting quorum." In other words, the State law, which is the basic law we must look to for conduct of the corporation, even today, and more so after 1991, the State law in Alaska is very permissive. It permits you to do a great deal under the articles, and the pending legislation in the Alaska legislature come January which the AFN endorsed in the last legislature is also very permissive in permitting you to tailor articles that are the way you want them for your corporation. Politically, at this moment, it would require that you get your incumbent board and your shareholders into sharing the view as to what you want done.

MR. PRICE: What percentage ofshareholder assent do you need to change the article?

MR. FESSLER: 50 percent.MR. PRICE: Of the shareholders,

not of a quorum; 50 percent of the shareholders.MR. FESSLER: Oh, that I, again,

we'd have to look what your articles...MR. PRICE: No, I'm talking about

State law.MR. FESSLER: Under current state

law it's 50 percent, it may be two-thirds. I'm being told it's two-thirds. The traditional Model Act Rule was that it was 50 percent.

MR. PRICE: Of all shareholders?MR. FESSLER: Of all

shareholders. In other words, it would be an absolute majority of the shares. But, remember that those votes can be cast by proxy as well as in person.

MR. PRICE: Right.MR. BERGER: The point that

Elizabeth made was slightly different and that was, as I understand it, that if the Board of the particular corporation was eager to see one of these proposals on the consideration of



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the AFN Convention passed by the shareholders, they would set a very low standard of passage, and if they were eager to see one defeated by the shareholders, they could set it at 90 percent and be reasonably certain it wouldn't be passed. That was the suggestion Elizabeth made.

MS. E. JOHNSTON: Highly unusual.MR. FESSLER: Board of Directors,

in an area where there was not much question that it was committed to the Board's decision by State law, in other words, the shareholder's opinion would be purely advisory. The Board could decide, even though it might not in the eyes of the State be legally bound by that decision to submit any decision to a vote of the shareholders, and if we're talking about that kind of vote, it is absolutely true that the Board could set the terms under which the shareholders' decision would be taken, but the point I want you to understand is that, in the absence -of the areas that I articulated, the amendment of the articles, the decision to take the corporation through an organic change, division of a corporation, and it has always helped me since the third grade to draw pictures, is of a pyramid. The shareholders are at the bottom, and they are numerous; their function is that they are equitable owners of the Corporate assets, after all obligations to third parties are satisfied. Their prerogative is to select a representative group called the Board of Directors. The Directors have, as their major task, charting in a broad outline the policies of the corporation and engaging the Corporate officers. The corporate officers act for the corporation as its agents to transact business with the world at large. To deal with their third person. A corporation, as was pointed out in Mr. Bass's rather interesting paper which I read on the way up, is in point of fact, a rather strange creature of our imagination. It is a legal fiction but if the corporation is tried to be given human attributes, the shareholders are hard to put in the matter, but the Board is the brain, and the legs, and



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the mouth and arms, that deal and make signs to the outside world, is suppose to be the officers. Directors, as such, have no power to bind the corporation individually; they operate as only the collective body, as the officers, or the agents of the corporation.

believe, is that the -- instead of going to Congress, and asking them to set these standards of passage, the corporations could actually amend their articles, and provide for certain standards of passage, depending on the particular organic act under consideration.

you could do, or I would suggest we think about doing. One other way to begin, I notice here, that one of the whereas provisions or reasons for Resolution 84-01 is the idea that each of these corporations should take the decision with some sensitivity as to the way in which other corporations are evolving a position on those decisions, because after all, we’re all in this thing together, and we don't want to be pulling oars in opposite directions. Well, there are ways in which you can use simple contracts to work out treaties as between the corporations without having to go through any.spectra or setting a larger corporate entity above them otherwise. There are a lot of things that you can do with this structure. Whether I am ill-informed, that it was sort of dropped upon you, was an idea, or whether it was the one you reached in the great grab bag of life, and pulled out, and said "this is what we want, the corporate form", you've got it now! And it has lots of opportunities, and lots of pressure points that are under your dominion, as opposed to requiring anybody that come along and deals the cards out to you a different way.

go to the first one, because I'd like to... it might be interesting to look at these shareholder questions, in the light

MR. BERGER: Well, your point, I

MR. FESSLER: And another thing

MR. PRICE: Can I suggest tha.t we



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of particular decisions. It's also possible that this resolution mandates corporations to do things that they might not do. That is to say, the minimum, for example -- which decisions have to be made by shareholders, and the minimum level.necessary, which is different from Liz's point, that is to say, does this Act, for certain decisions to go to shareholders that wouldn't otherwise go to shareholders, and does it force a level below which the corporation could go under existing State Law--above which. . .

MR. FESSLER: Your currentresolution...

MR. PRICE: Yeah, but you can'ttell by looking at 84-01, without looking at the context of each of the resolutions. .•

MR. C. JOHNSON: I'd like to askone other question. You mentioned, earlier, a couple of paragraphs ago, that you...that Directors presently have the power for setting standards of shareholder acceptance of specific actions.

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MR. FESSLER: Only in the sense,Charlie, if the decision is one which legally the directors could make on their own.

MR. C. JOHNSON: Okay.MR. FESSLER: It is within the

power of the Board to decide that they would take an advisory vote or poll of the shareholders, in order to assist them in making that decision. They would not normally be thought to be legally bound by such a thing, which is why I call it an advisory vote. Indeed, if you go to areas that may have little relevance to our discussion, normally directors are not supposed to do that, in other words, you're not supposed to elect a director, and then have the director constantly be coming back to you asking, "What am I to do?" "What am I to do?" "What am I to do?" If you think of the pyramid, the whole purpose of having the Board was to elect the smaller group that could make


Anchorage. Alaska 99501 ■ (907)274-4833

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decisions, and be cohesive, as opposed to having to go to much larger group, and constantly ask for a polling situation. Corporations were not Athenian democracies, and the only... you elect a representative body. So in that sense, the Board could go to the shareholders and say, "unless three-fourths of you say no, we're proposing to do this", or they can say, "unless 90 percent of you say no, we are proposing to do this." Those are advisory votes. There are very few areas under which the Board would be legally obligated to go to the shareholders.

MR. BERGER: Could I justClaude Dementieff, and then David Case wanted to get into this. Claude, you go ahead.

MR. DEMENTIEFF: As I understandthe State law, there's two different votes. There's for the basic changes in the bylaws or the Articles of Incorporation, more so the bylaws, I believe, it's 50 percent of a quorum. For extraordinary changes in the corporation it requires two-thirds, such as liquidation of assets, etc. This resolution here, if I'm assuming a lot of things. I'm asking more questions -- if my assumption is right, that this resolution allows the Board of Directors to set the vote, circumventing State law on the minimum number of votes, required without even changing their own bylaws, they could set the vote by resolution of a Board.

MR. FESSLER: One thing, I don'tunderstand Claude, so I can't really respond 'till you clarify on it -- if this -- has been passed, I understand by the AFN, is that correct?

MR. BERGER: No, it hasn't been,according to Charlie.

MR. DEMENTIEFF: No, here's theprocess of what we went through and so hopefully, we'll go through a similar process like this and come up with objections like Liz is making, before we go ahead and pass these. What we passed at the last Convention was that we would, we accepted a



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process that mandated that management and leadership of AFN get out to the regions and the villages, and go over these resolutions, hopefully making them understood, and out of that will come what will be acceptable to everybody, in going to Congress for amendments on ANCSA in 1991. And it may very well be that the very point that Liz is raising may be one of the objections, and that may very well not pass AFN. It will be presented to AFN in a different matter, that would take care of the objections that might arise, such as that one that Liz's talking about.

Mr. PRICE: Let me just say thatit -- it also may be that -- okay.

MR. BERGER: Just before we go on -- Claude asked a question, characterizing this, and not seeking to be majorities and Dan didn't answer, but Elizabeth, you were nodding in affirmation, did you agree with Claude's characterization?

MS. E. JOHNSTON: Claude, can Irepeat it back to make sure that I've got it, but as I understood what you were asking if the...

(NOVEMBER 15, 1984)(OVERLAP TAPE, SIDE B)MS. E. JOHNSTON: ...thrust of

this resolution is put into Federal law...MR. BERGER: (Indiscernible)MS. E. JOHNSTON: ...yes, Claude,

has built in an assumption that if this resolution were transformed into proper...

(NOVEMBER 15, 1984)(TAPE 5, SIDE B)MS. E. JOHNSTON: ...statutory

language and built into Federal-Congress -- Federal law, would this not then mean that it would, in effect, preempt the State law standards, and perhaps other standards that might be in



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someone's articles and bylaws and I was nodding my head, which -- Tom correctly says doesn't show up on the tapes, that in general, I think that's a fair statement.

MR. DEMENTIEFF: But basicallywhat happens with this resolution if it is put into Federal laws is, that we'll also have the State law to work with, plus a third now. So the Board of Directors can operate their options or decision in either one of three methods.

MR. FESSLER: Well, you wouldhave a problem in trying to decide the basic, and a very interesting area is that the Alaska Native Claims Settlement Act mandates that there be Corporations, and that they be organized under the Alaska State law, and the original vision was that there would be certain federal statutory restrictions on these Corporations that would supersede State law, that would expire in 1991. Now, it will be an awkward arrangement between State and Federal law to figure out how to make these two responsibilities jell if Congress keeps changing, extending and entering the area, while still leaving the basic proposition in place that these are Alaska corporations formed under Alaska law, and answerable to Alaska's state legal institutions.

MR. BERGER: Could I suggestsomething perceived here. This is fascinating stuff, but I think the, where Claude has gotten us, is this far; that the resolution, if it were passed, would enlarge the discretion of the Board of Directors, and they could choose to adopt the standard of passage in the articles under relevant State or Federal law, or the discretion given to them under the resolution. I wonder if...

MR. PRICE: I don't think that iscorrect.

MR. BERGER: All right.MR. PRICE: I think, first of

all, it is not clear, because the way resolutions were drafted,



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and of course, Liz, you were more actively involved in this than I, whether -- when these are finally drafted, it incorporates, as an additional limit, State law concerning extraordinary acts.That is... or other kind of things. This may not be exclusively preemptive. So I guess the answer to Claude, if I'm right, I don't think either of us know it at this point.

MS. E. JOHNSTON: I think...MR. PRICE: The Board of

Directors would be constrained. Certainly would be constrained by federal law; might additionally be constrained by State law.

MS. E. JOHNSTON: I think theintention of, and again Charlie, if I'm wrong on this tell me, but the intention, the thrust of the problem that the resolution was trying to deal with was to have Federal law preempted so you would not be restricted by these two-thirds and other types of standards within State law unless you so wanted to be restricted, as Claude points out, but you would not required to be restricted. In that way, I think it was a preemption idea that was -- the thrust behind, otherwise what purpose does it serve?

MR. PRICE: It may mandateprocedures that would not be required under State law, in other words, to some extent these provisions and that's why, I thought we'd go to them specifically, may require reference to shareholders, of issues that would not be required to referenced to shareholders under State law.

MS. E. JOHNSTON: Again, I thinkit's, I find it a difficult argument to suggest that's something that is significant as some of the changes that are properly inherent in the AFN resolutions, whether or not your stock is restricted. Whether or not you're going to change all of the assets from a profit corporation over in to a tribal organization, would not be something -- that conceptually is totally appropriate to take to the shareholders for a mandatory vote, and (2) that every corporation has promised that's what it's going to



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do, so instead of intellectually discussing whether or not this is something for shareholders discussing whether it should be mandatory, I think we should take that as a basic assumption. Because I cannot, it's very difficult for me to believe that there is one leader in this room who would be saying that he would not take it to shareholder vote (1), and (2), that he would not consider that vote mandatory; the problem is, what are the standards of the passage?

MR. BERGER: Could I just suggestthat what we do now is this. Monroe's ideas, as we look at these one by one, and I think we should turn to them, but before we do Claude, and then David and then Marlene, had their hands up.

MR. DEMENTIEFF: Maybe I canclarify a little bit more if I can, my own thinking anyway.Let's take the fictional corporation, that is bylaws says one-third, or 33 percent plus one is a quorum. The best they ever had, and their whole existence is 40 percent, and they're up against the gun, and they want to liquidate their assets. If this was part of federal law, this power of the Board to set a minimum vote required by shareholders, they could say, "we don't need to go to the two-thirds State law requirement, if we want to liquidate our assets. We'll just pass this resolution, and set the minimum vote, to liquidate our assets," is that... am I assuming correctly that this would allow that.

MR. FESSLER: I don't think youcould make that an ironclad assumption at all. If, unless the Congressional Act specifically addresses the Alaska Statue and says something to the effect that not- withstanding the provisions of AS.10.05.2762 I wouldn't make that assumption. All you bought is an expensive lawsuit.

MR. BERGER: Okay, did you havean addendum to that Elizabeth.-

MS. E. JOHNSTON: Hopefullyshort, Claude, which is just that I don't think that the AFN



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resolution attempted to address the question of liquidation, therefore I am one with Professor Fessler.

MR. BERGER: David Case.MR. CASE: I guess I had a very

basic question about the mechanics of all this. What does the Board normally have the power to change with respect to articles and bylaws?

MR. FESSLER: Your Alaska sectionthat I just cited, the Board has no power on its own to amend the articles at all.

bylaws?MR. CASE: But you can-amend the

MR. FESSLER: It can amend thebylaws. It cannot amend the articles. It is the only -- interestingly, under existing Alaska law we have a particular situation. The Board alone can propose amendment to the articles, the shareholders can't. Virtually every other state, shareholders can propose amendment to the articles. The Board has to propose the amendment. And then Alaska Statute, it must go to the shareholders, and it must receive an absolute two-thirds majority, not two-thirds of a quorum, but two-thirds of the shareholders, or the 'amendment fails.

MR. CASE: And I'm correct inassuming that shareholder voting requirements are not normally parts of bylaws.

MR. FESSLER: No, they are not,and nor can the bylaws override the provisions of the Article of Incorporation. To a given corporation, the Articles are like its Constitution, the bylaws are more like the statutory law. The bylaws are easier to change, but they are always subordinate to the provisions of the Articles, which control.

MR. CASE: And bylaws could nevercontain shareholder voting requirements?



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MR. FESSLER: Bylaws could nevercontain a shareholder voting requirement that was inconsistent to with Section 276, they could never set a lower figure. Nor could they set a higher figure.

MR. CASE: Okay, but the Articlescould set a higher figure.

MR. FESSLER: The Articles arecompetent to set a higher figure, if they are, and the bylaws probably could contain something that would suggest that the Board would take advisory votes of shareholders. But in terms of "how do you amend the Articles,” you amend them under existing State law. And whether the Congress could come along and say, "we're going to have different standards for amending your Articles in these given areas", is a question as to whether there would be a concession of supremacy to Federal law in that area. Which increasingly will become dubious; but, one thing you want to do as a technician is to make very certain that whatever you ask Congress to do directly addresses the Alaska State corporation code so that no one is left in doubt, as to what it was that you attempted to accomplish. For that, at least, will conceptually simplify everyone's understanding of what's going on, and perhaps save you the expense of some very tortuous litigation.

MR. CASE: My question really is,does the resolution address the question of whether the Board is going to be amending the bylaws or acting by a resolution or is that something that's not decided, not stated in the resolution period.

MR. BERGER: It is unnecessary.The resolution said the Board can determine these matters, and you don't need to look to the bylaws, and the Articles.

MR. CASE: State law requires theBoard to act through the Articles, by suggesting proposing amendments to the Articles, and then voting by the shareholders.



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I'm assuming you got to be pretty specific, if you're not going to do it that way.

Elizabeth agreed with Claude that this relieved the Board from, compliance with State law.

MR. C. JOHNSON: No, theresolution as it was drafted, and the concept behind the resolution was basically that all matters that affect the major changes of the Corporations in 1991 will go to the shareholders. Now the idea of having the Directors set some minimum votes was not to instill an idea that a smaller amount could pass' a specific resolution, but the general discussions that we had about that were that a larger amount would need to take some courses of action, particularly with transfers of assets, and things like that, and I was talking like two-thirds. As far as I can remember, we never talked about the Board setting a smaller amount for passage. It was always the higher amount of passage, and it generally related to such things as transfer of assets.We never did discuss, in fact, the Board overriding either the bylaws or Articles of Constitution, I mean, Articles of Incorporation.

want to add something to that?MS. E. JOHNSTON: Only that I

understand what you're saying was discussed, Charlie, but the actual language of the resolution talks about a simple majority of the quorum, and that's the lowest standard that exists for passage of existing corporate law. You do have, I understand, you do have some reality problems of what degree of participation different corporations have.

these resolutions they were in concept only, and the mechanics of what's going to come down is going to be worked out. And in the next several months. That was the reason for it, and the reason

MR. BERGER: But, I thought that

MR. BERGER: Elizabeth, did you

MS. M. JOHNSON: When we drafted


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to get to the concept is the reason we got this language because of the existing organic documents of the different corporations, and in the explanation that went out with these resolutions. Not only does it say that we were trying to get to the minimum. We want the highest vote possible. We were not trying get by State law at all. That was never the intention of the group. The explanation said that it was a minimum, and that it was according to the articles and the bylaws of the existing corporations.

MS. E. JOHNSTON: The point is that, Marlene, that many corporations do not have anything in their articles and bylaws on these points, because they are relying on State statutes. Because State statutes form the backdrop to most of our articles and bylaws. I suggest to you that it -- the problem that is intended to be solved by that is the real problem, okay, that many corporations have. It's not Bristol Bay's problem, but I know it's other corporations' problem; which is the low level of participation, in a shareholders meeting you cannot do what you want do, and meet the statutory requirements that are in State law. And so of course you do want to get around them. I believe that that's a legitimate desire. You can't meet... many Corporations don't have even two-thirds participation, so how can they meet a two-third's affirmative vote. Of course, they want to lower it.

MR. BERGER: I wonder if we could go on to look at some of these specific resolutions. I think that the point that Elizabeth made has been flagged, and I suspect the AFN is aware of it.

MR. C. JOHNSON: We're aware ofit now. The next resolution is another one, I think, that's going to cause a lot of discussion, because it's the alienation of stock issue. The opt-in, the opt-out issue, essentially. And the way it's worded here. Again, as Marlene stated these are thrown out for discussion, and these are not the final aye/nay things; and we will change them to suit what people, what we



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real ly need. I might say, when doing the process, the first two or three meetings, we did a lot of discussions, Marlene -- like Elizabeth is talking about now -- and finally decided unless we have something specific that we can talk about, let's write it all down, and go after some concepts, then we can refine it from there. So, that's the intent here. This particular resolution; I'll read it then I'll turn the mike over to somebody who can explain it, maybe better than I can: "As therefore be resolvedby AFN in convention assembled, that the convention endorses the concept that ANCSA should be amended to eliminate the provision for allowing stock alienation after 1991, but, that each corporation has the option to permit alienation of stock under the current ANCSA provision. Be it further resolved, that this option may be exercised once prior to December 18, 1991, and thereafter as prescribed by corporation Bylaws."

There was a lot of discussion on this particular one, whereas there was a couple of corporations really wanted to maintain the current provisions which permit in alienation only by passage or by positive action. There was also a lot of discussion on this one, where everybody says well, what is going to happen to all the little corporations, the villages that might not take action? We should maybe automatically put these protections in there, where they could change them only by vote of the shareholders or some specific thing; and that was the intent here. This resolution takes the later view that the provisions would be automatically, or the protection would be instilled, and that would take a positive vote of some kind to allow alienation of stock. I don't know what we're going to end up with on this particular one; but that's the idea.

MR. BERGER: Monroe Price.MR. PRICE: I'll just add one

comment. First of all, it may be that "bylaws" is not correct, it should be Articles. Ultimately, these are the kind of things that will have to be looked at. This shows, in some way the



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interplay between current state law, future state law, current federal law, and future federal law on shareholder voting rights. Under current federal law, and current state law, restrictions on the sale of stock would terminate in 1991, with no shareholder .vote whatsoever. This provision mandates that the restrictions remain and requires a shareholder vote to remove the restrictions, but requires a shareholder vote determined in the way indicated in the first provision. Now one could say that that is a higher shareholder voting requirement than now exists, since now no shareholder consent is required under law. This is aside from the question of what a corporation does to remove restrictions. That may not be convincing to some people, but I just want to make that point.

MR. C. JOHNSON: Did you use upall yourself on the first one?

MS. E. JOHNSTON: Charlie, wouldyou be willing, or you or Monroe, just to talk a little bit about the second part of the "be it further resolved..." where we're talking about continuing options to exercise; just get out whatever ideas we're behind at.

MR. C. JOHNSON: Okay, actually Ithink maybe if we went to the next resolution, that would kind of address that. If you remember yesterday, when Tony Strong was proposing some solutions, on dissenters' rights, that maybe, and the option to buy them out, in a way, and I think that is partly one of the things, that this, the second part of the resolution, would allow.

84-04.

the next one is.. .

MR. BERGER: You mean, resolution

MR. JOHNSON: Well, [84]-02; and

MR. BERGER: [84]-03, I mean.MR. JOHNSON: [84]-03. Maybe if

I could go to that one, and then we can go throw that around a

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little bit. Reading it, it resolved part "that the Alaska Federation of Natives in convention assembled endorses the concept that ANCSA should be amended to allow corporations to purchase their own shares before 1991; and during any subsequent period of stock alienability." Since shares under stock alienability can't be transferred and we may have some dissenters problem, or some non-Natives that we may want to eliminate through some provisions. We have to have a process to do that. And I think that's what this is attempting to do, and maybe Monroe can, or somebody else can elaborate on that.

this is a concept. It will be hard to draft, and hard to execute; because there will be problems of evaluations, fairness, and some of the problems that Tom mentioned earlier of trying to assure that there is not a wealth/poverty distinction, and ownership of Native shares. I think those have to be addressed by individual corporations, and to some extent by the statutes. Again, one of the issues is, to what extent should that be an option of corporations to fashion their own mode of dealing with this question, and to what extent it is something that should be dealt with by Congress. There is a question, such as should these be windows of time for the re-purchase of stock, which are discreet, and set by law or should this be a continuing power of the corporation; questions like that.

couple of questions about this resolution? It says that, in the whereas, it says in the explanation, "Even if stock cannot be sold or transferred, a corporation would be allowed to buy stock from its shareholders, that want to sell." That would remove some of the pressure on the corporation from shareholders that want to be able to sell their stock. Charlie referred yesterday to the expectations of individual benefit that exist out there. People think they should get something out of this; want to sell their shares. This is is not a case of the corporation being

MR. PRICE: Well, I think,, again

MR. BERGER: Could I raise a



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able to match an offer from an outsider. This isn't right of first refusal. This is a right, unilaterally, for the corporation to make an offer itself at a price that it decides on. It seems to me that's a very far-reaching concept, and if the right to make the offer and to purchase shareholder's stock, is exercisable at anytime between now and 1991, you could wind up with a very few shareholders, Native shareholders, and a great many Native people who are no longer shareholders.

but I think that means it could be the most important of all of these resolutions, and I, maybe I'm the only one here that looks at it that way, but Marlene, would you...

this resolution is going to need a lot of work, but I think the real intent, at the time we wrote it, was giving an "all out" for those shareholders that don't have voting rights what have you, and don't want their stock to be not inalienable; where they could not sell it or get rid of it -- that really want to get out of the corporation. It was not the intention of the corporation ever offering to buy shareholders out.

little bit to that. A couple of things that we discussed. If we assume the ANILCA provisions for right of first refusal, and allowing the corporations to deny the right to vote after 1991 to non-Natives, that is part of the thing that Marlene was discussing. Also, there was some discussion at -- during these retreats, of how can we perhaps benefit elders, that are not being... not getting benefits out of the Land Claims Act. And perhaps this might be a way to do it. Those were the kind of things that were kind of behind this particular resolution, and maybe you're right, it does need a lot of work to maybe more clearly defined what we intended, in this particular one; to evade the danger that you are pointing out.

I'm just looking at the bare bones of this resolutions,

MS. M. JOHNSON: I agree that

MR. C. JOHNSON: Let me add a



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Bart.MR. BERGER: Elizabeth, and then

MS. E. JOHNSTON: Like Marlene, Isee this resolution as a window, rather than, if you like a continuing kind of thing, because there will be a crucial decision to be made by the shareholders of each corporation, which way they want that corporation to go. Granted, this is not a legal event, but BBNC did make the effort to survey its own shareholders, and we came out with a profile where 63 percent of the shareholders wanted continuation of restricted stock. And 36 percent did not. Now, as management, it seems to me that our job is to make sure that as we move toward the restricted stock goal, that what is put in the Federal statutes is as constitutionally sound as our brains can make it.

But, secondly, that politically, and in an institutional sense, of that 36 percent, incidentally, I'm not suggesting to you, that 36 percent all want to buy out. Because, when they're really presented with the choices... come the real vote, this is a survey, a poll, not the real thing. But, some of those will switch, but among those 36 percent are some who would like out, and although you raise the specter, which I think is, not only, well, we have two specters,‘if you like. We have the specter you've raised which is real, and we have the alternative specter, which we already have, of people who would prefer not to be in the institutions, and who are locked in.When people look at Native corporations, and they say well, "Why are there so many proxy fights?", or "Why is there such unrest?", some of it has to do with some people being locked in who would prefer not to be. And, I do not, I guess, like Marlene, I do not perceive that this is an ongoing thing over time, where you would have a continual sort of loss, but rather that at a crucial time when the vote is taken, people could make their choice; we do have at Bristol Bay, in some of the villages, we have a tremendous difference in pattern among villages. In some of the

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villages, such as Chignik, 90 percent of the people who were originally enrolled in Chignik, are no longer there. We have villages like Togiak, where it is exactly the opposite pattern. Ninety percent who are originally enrolled there are still there. I would think that would make a significant difference. Both on what people wanted and also in terms of how real the specter is that you are laying out from your own experience, and so having different corporations go a different way may not be bad.

MR. BERGER: Tony, and thenJerry. Tony Strong. Oh, I'm sorry, Bart Garber... forgive me.

MR. GARBER: I don't thinkthere's anything clandestine in this either. I think the discussion, of this resolution ought to come close in hand, or along with the new Natives' provision, because what you have here. If you want to say that this option is exercised, with the idea that there's also a backdrop of the first right of refusal that is extended both to the corporation and to the family, and yet it's a limited situation, so that you don't -- what you have -- a market, that's in back determining the shares. What you end up with then is a large corporation with a lot of financial capability, perhaps bidding against the children of this person, who is allegedly the beneficiary under these inheritance provisions, who may want to be in, but as a parent, who is a shareholder who does not want in, you've got a possibility there, where you're eliminating their ability to get the shares. And to be fair, I mean, even if the corporation would like to see that child get it, what is he going to do? Are they not going to bid what the true market value is? And therefore, the one who wants to get out isn't getting the fair value, and yet the children are stuck in the situation where they can't bid the 500,000 that the corporation is going to be able to get through bond financing or something.

So I think that, although it's going to add to your problems, those are related issues that ought to be talked about



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because from the very first legislative history, the idea was for a corporation to be a perpetual thing, because of the intended beneficiaries were supposed to be people who would inherit. You want to balance that, though, against the rights that you've given to current shareholders, but notice that your decision is going to affect those who might have otherwise gotten those shares for free, through inheritance.

MR. BERGER: Tony, you're next.MR. STRONG: Yes, there was

something that occurred, while the discussion was going on, that as was stated, I think, both by Charlie and Marlene, and by Liz, was that one of the reasons for this 84-03 resolution was to allow those people who are not current voting, are shareholders but they're not voting shares. In other words, the non-Natives who are holding the shares. And you have to tie it also, with what Bart said. It has to tie it with those people who are born after 1971. The solution I suggested yesterday had some bearing on it, as well, about being able to issue shares to everybody who was born, and anybody who's currently holding shares, only holds it in life estate.

The problem I see is that this resolution doesn't address the people who are, do inherit shares after the window' closed. If we take the assumption that after 1991, non-Natives who are holding share in the corporation cannot vote those shares, then this resolution doesn't address them, 'cause there will be non-Natives who will be inheriting shares after 1991.And if their shares are not votable, they may have the same feeling of wanting to opt out. So, I think that resolution doesn't address it and I think it was an important issue.

MR. BERGER: Charlie, you want toanswer?

MR. C. JOHNSON: Yes, justbriefly. It says that you would allow this process during any subsequent period of stock alienability, then in fact stock



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alienability is extended, it would continue to allow that for those people who could not, who would not be voting their shares. My response was that, was to the fact people were saying they perceived it as a window, as opposed to a continuing authority of the corporation. If it was continuing authority of the corporation, then there was those people who don't have the right to vote their shares may have that continuing ability to sell or alienate themselves.

as a continuing thing, additionally, in further resolutions. You remember yesterday, we were talking about the percentage of shares that are passing to non-Natives, and we said that part of that, a large part of that, is the matter of definition, because of the blood quantum requirements. In one of the resolutions we had addressed that particular problem, in a fashion, I think that, would allow each corporation to extend some of these benefits to those that would have Native blood in them, or descendants.

likely to happen should Natives decide to sell their stock, prior to 1991 or after that, I think there's some questions that need to be raised here. Thinking back about the effect of the cash payments that were paid out to non-resident shareholders, and the sense of unfairness that that created among part of village residents, I see a parallel here if, in fact, a significant number of people are able to sell their stock back to the corporation. Justice Berger mentioned the possibility of creating two classes within' the Native community -- those that have shares and have influence on the corporation and those that do not'. But thinking through this, it seems that if people began

MR. STRONG: We are looking at it

MR. BERGER: That wraps that up,Tony.

MR. STRONG: Apparently.MR. BERGER: Gary, and then Ralph. MR. ANDERS: Looking at what's



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to sell their stock back to the corporation, that it might set off some kind of chain reaction. Another point related to this, it seems that the intent of some of these resolutions is to maintain corporate control. In thinking about this, it seems that it might be possible to concentrate on a legislation that would require continual Native ownership, both in the village and the regional corporation. I don't know if that is a viable approach, but it seems to be one way of dealing with the issue of the maintenance of control within those entities.

MR. BERGER: Ralph Johnson.MR. R. JOHNSON: I believe that

I'm assuming correctly that throughout all this discussion we're only talking about voluntary sales, that is to say shareholders only going to sell voluntarily because the resolution is unclear on that. Okay, if that's true then the second question it seems to me that Monroe Price eluded to, and I find, a much more troubling one, and that is what value is to be determined, and with closely held corporations shares it's exceeding difficult to arrive at value. I mean there's just any economist or corporate person, accountant can tell you, you can take book value, you can take asset value. You don't have any market to determine value, and I gather there is no market, as such, at the present time, so there's really no way to get a value on it; if you ask me if I want to sell my land in eastern Washington, I say "sure, depends, what's the price?" and if you say, "$50,000", I say, "that's ridiculous, I don't want to sell you." You say, "4 million dollars", I want to sell it. So, I mean it isn't worth that, I don't have any land like that, but I'm just saying that the price is everything, and it seems to me that unless the resolution addresses the question of value or price or something like that, then it's not a very helpful exercise to go through.

MR. BERGER: Just before I callon you Dan -- the kind of scenario that concerns me is, suppose in the village you have, as Tony Strong told us yesterday, you



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have in some village a family that may dominate the local village corporation. Other families that feel, for one reason or another-, that they might as well sell out at an offer advanced by the village corporation, and an offer that may bear no relationship to the value of the land which, of course, may not be ascertainable anyway, but may not even bear any relationship to the value of the assets, apart from the land. The non-real estate assets. There might be even money in the bank account, which would dictate a higher offer than has been made. Well, in any event, people might sell out. They might not get anything like what they should for their shares. Furthermore, once they've sold out, if they are going to stay in that village, it may be that over a period of time, they become looked upon as people with no rights to use the corporate land, and you may wind up with the type of situation that we have in Canada, and some other countries, where you have some people who are actually called status Indians, and other who are called non-status. They have no status. Well, in Canada it relates to their status, in terms of the special relationship with the Federal government.It doesn't relate to private property rights, and corporate assets, but here corporate assets are the patrimony of Native people, that's the... At any rate, is there an argument? (Looks like I'm going to get one.) Is there an argument for making some kind of distinction between villages and regions in connection with this? I'm not really dealing with the resolution. I'm dealing with the question of principle. At any rate, Dan and then David, and then Charlie.

MR. FESSLER: If David had a...MR. CASE: ...Just a small point,

and that is that this is a problem that has already arisen in the Lower 48, in allotted reservations where people have sold their allotments, and now are viewed as having sold out their interest in the tribal lands, and that is a division that can occur, and



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has occurred in, as far as I know, in places in Lower 48 for different reasons.

MR. BERGER: You mean allotmentssold between 1887 and 1934.

MR. CASE: Right, and then thefamily is perceived as not having any. They may be members of the tribe, and they reside on the reservation, and all, but there becomes division between traditional people, who have perhaps held onto to the land at all cost, and now the factions developed between traditionalist and people who have sold their allotted lands.

MR. BERGER: Dan Fessler.MR. FESSLER: Well, just- a couple

of points. I read upon correctly interpreting Resolution 2, and Resolution 3 together. The proposal would all come down to the idea that the stock would be non-alienable. There's no right on the part of any person to demand the corporation that it part with current assets, in order to purchase the stock. All these resolutions would do, would be to say that the corporation would have the power to decide, that it would adopt that policy. One thing I think you'd want to be concerned about is, whether the corporation on making the decision, would make the decision generally, or whether it could make the decision with regard to specific individuals, because at some point there will be a problem of people complaining of the potential of discriminatory treatment. And as a general proposition, the idea of restriction on the alienability of stock and corporations has been around a for a long time in the American legal experience. It has never been widely received. It has always had rough sledding.

There are two basic strains of thought. Those who are opposed to restrictions on alienation try and claim that stock in a corporation is akin to personal property, that property can only be affected by the State in accordance with due process, and therefore there are restrictions, which the individual citizen



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has with regard to anybody's ability to dictate as to what will be done with his rights. And if you're using the law to make the stock inalienable, then those laws have been tested, and they have not always prevailed.

On the other hand, and perhaps the better reason prospective is, that as long as the restriction on alienation is tied to what is called a proper corporate purpose, and it would seem to me that Native corporations could essentially define proper corporate purposes, so long as the restrictions are reasonably related to that articulated corporate purpose, and so long as they do not amount with total prohibition, then they have been deemed restrictions which have passed muster. My only caution would be that whatever you ask Congress to do, you'd want to do it with the fullest knowledge of areas of recurring trouble that you want the legislation to speak out and specifically extinguish as land mines in your future, before you start walking around in the twilight in that area, because it can be a problem, and as several people have suggested, the ultimate problem is one of, "is there an obligation on the part of the corporation?"Must it treat all persons, similarly situated, in terms of their desire in the same manner? And the other question is, "Is there a fair price that is being paid?"

Now, in Alaska at the present time, if there were to make analogies to your current corporation law, where dissenters' rights are recognized with regard to those people who perfect them for organic changes, the law's very solicitous of the minority shareholder. The corporation has to make an offer; if the shareholder is not happy with the offer, they enter into a period of negotiation over the question of evaluation; if they cannot (the shareholder and the corporation) resolve that matter, it goes to court, where there is a judicial evaluation. If that type of theory were ever seized upon, all I'm suggesting is that you could be opening the door for courts coming along and deciding what is the proper and fair price to be paid, and that

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has with it its own risk, and indeed expenses, in getting that type of evaluation settled.

MR. BERGER: Charlie, and thenBart.

MR. C. JOHNSON: Without arguingthe process for establishing a value, the intention is in fact to be discriminatory. As Gary Anders mentioned little a while ago, that perhaps we need some specific language to guarantee continued Native control, and in fact that's part of our intention. There's also a couple of more assumptions that I think that we need to speak to. One, these resolutions-- are placed out in front, assuming that the corporations will continue to be the organization that survives 1991. There's a resolution that allows, that we're requesting the change of assets to other types of organizations. That's another assumption, we might be able to do that. Our intention, is in fact, to be discriminatory. Now, back to the other point that Tom just brought up about the fact that in the village families will, you, certain, certain families, in fact do control the politics of the region -- the village. I think that's a moot point. That's how it is, and that's it's going to be. It's like arguing about winter. It's a matter of pure numbers. The larger families are going to control, and I think to argue that point... it's really a moot point. It's strictly a matter of numbers that's been in place that develops in any types of society irregardless. I don't think that point even needs to come up.

MR. BERGER: Well, Tony, youraise it first-of all, and so we'11...Tony, than Bart, then Claude.

MR. STRONG: I do have a responseto that. But, I also have another point, that really hasn't been discussed. At this point, I don't know if it has ever been brought to the attention of the Commission. The response I have really goes, and continues with the discussion I started

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yesterday about that -- the structure of the corporations. The way they are set up, and the way the votes are cast, does put the power of deciding what the corporation is going to be doing, in the hand of a few people, or a majority, the majority in a sense. The majority rules; and in certainly in southeast Alaska, where we have traditionally had a clan system of governance. That means, to me, when the clan leader wasn't able to take care of their clan members, that clan leader was replaced by another.

leaders are the ones that took care of their members, and it wasn't up to a person who was popularly elected by other member of the village, or other members of the region for that matter. So, the superimposition of a new structure broke up that decision making and it took away the authority of the clan leaders, and I think, I suspect that, that basic principle is true in other regions, as well. I'm not as familiar with the Inuit region, but I understand, that whaling captains had a lot of... a lot more say historically, over what went on in the village, than they currently do; where they do now, do now have some say over the distribution of the wealth that comes with catching the whale. But, they don't have the same kind of power that they historically have had over other decision matters and the important decisions of the community. So I do think that it is an important subject for us to address. It does involve the culture, and it does involve the decision, about how assets are to be used, and wealth is to be distributed in the communities. Then...

The system of governance, traditionally, was that clan

MR. BERGER: Are you going to yournew point.

MR. STRONG: Yes.MR. BERGER: Could I -- I wonder

if we could just...MR. STRONG: Sure.



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MR. BER.GER: . . .wrap this upbefore you do that, and I was using Tony's observation about villages in Southeast families, and so on, as an illustration. I think Charlie is right. It is a question of numbers, and that's life, but my point is whatever the reason, for people selling out in the village. If they sell out to the corporation, they may be in the same, position as those people who sold out in the U.S. when they were given the right to -- when all the reserves were broken up and...

(NOVEMBER 15, 1984)(OVERLAP TAPE, SIDE B).

MR. BERGER: ...each person got apiece and those that sold out were regarded as people'who;: weren' t really entitled to continue as members of...

(NOVEMBER 15, 1984)(TAPE 6 , SIDE A)

MR. BERGER: ...the tribe bythose who had hung on and it seems to me you've got a very similar situation. Well, I don't want to flog that, but Bart, and then we'll come back to Tony and then Claude.

MR. GARBER: Just two things andthe one relates to that. I agree with that, Charlie. You're not going to be able to do anything. I mean, in our village we happened to have four families. But that's the way it is and that same power structure applies not just to corporations, but it applies -- well,"’state corporations -- it applies to the IRA corporation and it applied probably before that to the traditional, 'cause even though the-leader was thrown out, he was thrown out by the majority.. Because if the majority didn't want him thrown out he wouldn't have been thrown out. He didn't throw himself out voluntarily. So, the question of, "Who is discriminating?" -- I think is important. We're not going to be able to do anything about the people in the villages. I think there's one tendency though, that's beginning and that is that we



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ought to stop the federal government from discriminating on the basis of whether you're a shareholder or not. Some recent federal statutes have made that distinction and I don't think that we should risk the status of a Natives with the federal government in a special relationship on the basis of whether he owns stock or not and has assets. So that status should be. protected and I think it could be if -- when we approach the federal government and ask for this ability to allow us to buy back, that we state specifically in there, that even though the person sells, that does not affect his status as an American Indian under 'federal law and that should at least stop, to the degree that we can, discrimination. But not discrimination amongst us, but discrimination by the federal government on that basis. The other point I wanted to address, I understand and I realize the restrictions on alienation that they are deemed, per se, unreasonable when they're absolute and that you usually need, Professor Fessler, a reason that's related to a corporate purpose. I submit that the federal government could make that alienation period absolute based not on corporate purpose, but on federal plenary power, because ANCSA is Indian legislation. And so I don't think that we really -- well, there may be an issue there, but I think that there is a clear "out" at least with regard to absolute alienation of stock in ANCSA corporations due to the special relationship and the federal governments plenary power over Indians.

have -- Claude, do you want to add anything and then we'll come to Tony.

MR. DEMENTIEFF: Just an observation more -- well, I think my question was answered but, right now we do have two classes of Natives already. Those born before 1971 and those born after. I think it needs to be, not discussed just here, but statewide by all corporations. Just what are the destructive elements if any, of that situation? ANCSA legislates

MR. BERGER: Maybe we could just



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the removal of the restrictions on the stock after 1991, which will increase the separation of the two. different Natives. Shareholders, non-shareholders. I can imagine going to -- going home and saying, "Oh, hello, how are you doing? I haven't seen you in a long time. Are you a shareholder? I'm a shareholder!" People are going to be talking about that -- that type of situation. Nobody's really looked at what destructive elements, if any, can come about because of that situation.

If you want to have the corporations buy the stock, there's -- you can't do that after 1991 according to the law, but maybe in the interim, there are other things that can be done.If the intent of the resolution is to provide for the elders, for example to give them something before 1991, which is an- honorable thing to do. There are, there are possibly other ways that it could be looked at. I'm using the example of the New York Stock Exchange on the, on the options market that puts in the calls.

A corporation may have the main institute of contract between a shareholder and the corporation. On a call type of situation where it gives the corporation the option to buy the stock at a certain set date or whatever the contract would say. You wouldn't actually buy the stock but it would still have that shareholder, have voting rights the would still be a shareholder. If the corporation is given the option or the money option to the, to the shareholder and done the honorable thing for the elder and not created the second class of Native, that probably should be considered somewhere along the line also.

MR. BERGER: Well, just let memake one observation and then we'll go on to Dan. I think Claude's point (and you all realize that I agree with him) is well taken that the deep seated consequences of this have to be considered. You've got two classes of shareholders now. You're going through a great big series of steps to try to get shares to the people that don't have them, while they happen to have been denied them because they weren't born in time. But at the same



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time you're proposing that there be a buy-back -- an opportunity for corporations to make offers to the shareholders and you could wind up with another division of people according to whether they hold shares or not and in the villages it may be more important than in the regions, because there it might, in the end, mean that they would be denied the use of corporate land, treated as trespassers. That's one of the long-term consequences to be thought of. Well, Dan, you want to talk about subsistence, I can tell!

MR. FESSLER: But what I wantedto do is just to make one comment about these resolutions. I understood the point that you made that they were drafted in a very general form and that you're going to work further on what they're doing. The only thing that I would say, I obviously, having just come here last evening from California, if I were to spend the rest of my life here, could not learn and become a source of judgment as to what is the best thing to do with respect to the human problems. As a lawyer, the only thing I do is draw your attention to some of these areas in the hope that however you word these resolutions they will be drafted in such a manner as to minimize any ambiguity or leaving you open to lawsuits. Whether or not you -- whatever the content is, just as a technician, I would hope that you would specifically interface with the state statute so that it is not a matter of speculation as to what was intended by Congress and if the federal government chooses to speak out and characterize a permanent imposition of non-alienability on the stock, as something which it is doing under its power to legislate, with respect to the Native population of the United States, then the resolution ought to say that emphatically and not leave it as a matter of speculation as to in what sense Congress was acting. These technical matters are ones that could be very important to you, because the last thing you want to come out of this with, is to have to go back to Congress yet again and to mount this all over because you've



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spent several hundred thousand dollars in litigation learning that it is worthwhile dotting the i's and crossing the t's when you -- when you're doing this type of thing.

MR. BERGER: Yeah, Tony and thenGlen and John and Gary. And then we'll go on to the next resolution.

MR. STRONG: I've seen Glenraising his hands for a while. I think he wanted to respond to the earlier discussion and I'm going to change the subject, I think.

MR. FREDERICKS: I agree thatwhen I go out to my villages and talk about 1991, they ask me, "What if I sold my stock right,' if I had the right to sell it, where do I then fit?" I say, "you're, well, I guess you're non-Native then," you know. "Where can I hunt?" Well, according to corporations, you just sold your stock and your land, you can't, even by right, go hunting because it's owned by these other people. You are -- and that's the kind of class we're gonna -- we're gonna create in the long run I think. That's why ̂it's so important to me -- is to separate'” the land. That land/•would never be sold by some institution, you know. Who the hell cares whether I sell my stock? And that's what the Natives are telling us. "Hold that land." But the way the system is now, if I sold my stock, I've sold my land rights. I can't hunt. And I think that's what we -- I think that's what they're saying to us, you know. And only way, as I see it, is to separate that land.If we have to go to Congress to do that, if we can't do it by state statutes, with -- then we have to go to Congress. And I think that would solve our problems, you know.

MR. BERGER: Well, Glen, I thinklater on in the resolutions that's what we're coming to -- come to grips with that. Well, you know that better than I do. But it may be this discussion, which I've found very helpful is driving us towards your position, so maybe you can relax and wait


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till we all reach the point at which you've already arrived. Sorry, John Taylor.

MR. TAYLOR: Tom, I think theremay be another unintended consequence of some of these resolutions that we may want to explore a little, just so we know what we might be getting into. I think I'd like Dan to comment on it too, possibly. As I look at the possible impact of some of these resolutions, if they go through the natural chain of events, that they may have on village corporations, I suspicion that if we do make stock alienable in the village corporations, what we'll end up with is, out of the 50 percent that are left over, closely held corporations, very closely held corporations. And that brings about a whole new series of economic dynamics and corporate dynamics and, in some cases, legal dynamics. Now, I'm not so sure that closely held village corporations are really what you're after in the long run.

MR. BERGER: There's Gary andthen Elizabeth. I hope. Am I right about this.

(Indiscernible.)MR. ANDERS: Let me just say add

a footnote to what John said. In thinking through past experiences with regard to the termination of Native land rights, we've seen various patterns affected with regard to per capita distributions versus tribal distributions. And there are pro's and cons to both in terms of the probability of a certain proportion of people succeeding in economic terms. Per capita, gives a higher probability simply because of the lack of concentration, the capital. It seems to me that many of the resolutions that we're looking at give a very high degree of flexibility to individual corporations. Tha:t may be a strength, but it also may be a weakness.

As an economist and as someone that studies the operation of markets with regard to the potential transfer of Native corporations, what I'd like to see discussed more concretely is



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the process envisioned by which shares can be transferred or signed back to the corporations and in that I think that there are impediments that can be built in to ensure that if the stock is going to be sold that it will, in fact, receive a fair and just price and that some of the worst case scenario affects are ameliorated and there is another point that I would bring in .with regard to the integrity of the village corporations and the importance of the land base to the subsistence rights of Alaska Natives and that is we're not looking at inter -- we're looking at inter-dependent, not independent situations.

The development activities that will occur, instigated by certain regional and village corporations, it'll have a great deal of effect on the natural resource base of which people draw their livelihood. And it's potentially conceivable that you would have development activities occurring in mining and in other areas that would have very sharp effects on the quality and quantity of game resources available for those people.

MR. BERGER: Elizabeth and thenBart.

MS. E. JOHNSTON: I know I'mrepeating myself but I do want to get in again that regions and villages do vary. And in Bristol Bay's case itself, we own only -- or -- I guess, what 98 percent of what we own is subsurface estate. There is no particular location of the region except the Bristol Bay Area. But there's no -- that division between Native and non Native, those two classes, doesn't ring a bell for me for the region. Among our villages, in some of them, it rings a real bell, that it would -- that it should be of real concern. In some of the other villages.

MR. BERGER: Do you mean,Native/non-Native or shareholder/non-shareholder?

MS. E. JOHNSTON: Share-holder/non-shareholder, I'm sorry. Shareholder/ nonshareholder situation. In some of our villages the movement of the

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population has already taken place. In effect, it's almost an abandoned village and so the -- the -- the thought that there would be people there, living there trying to utilize subsistence at the same time having sold their stock, doesn't ring a bell in those villages. While others, it would be a real problem, and I just -- I just stress the fact that fact patterns vary widely and would make a difference on whether that would come -- whether that problem would occur.

The only other thing that I wanted to mention is -- ties in. Various people have -- have talked about the value problem. As I understood it, when the resolution was initially discussed there was some possibility of building into the statutory framework, a formula for providing value. And I just want to caution that -- and I think that's an excellent idea and obviously in doing it there would be a variety of thought processes going through it. And it would be a formula that would apply so that, again, the management couldn't wing it and just offer people whatever they thought they could get away with.But, something that looks very simple like book value, is very appealing. The only problem with that is, in many of the village corporations, the land has not been booked, or if it's been booked, it's been at a dollar an acre. But I would further raise for you, what can you say the land is worth if it is committed for subsistence use and will not be used for something else, i.e., income-producing for 50 more years. What kind of an -- in economic terms, value do you want to assign to that as opposed to the mythical and hypothetical corporation that Roland referred to yesterday, which is in a different position as to, in economic terms or values of those lands. Lastly, I just wanted to say on values that even in the regional corporations, what's gone on in booking the land assets has varied widely for those of us who just have subsurface and have no, what is the proper phrase, unknown reserves we have not booked anything, we're still in the exploratory stage. There's not one thing that will show



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up except on the footnotes. At the same time you have a corporation such as Sealaska, which has valued and booked their timber assets. So, all of that, in a variety of ways, has to be built in and understood in approaching appropriately a formula that would be fair both to the corporations and to the shareholders.

MR. BERGER: Yes, Bart and then

MR. GARBER: Yes, just • two thingand I understand the distinctions that Liz is making with regard to which shareholders still use sub -- land and subsistence use, which ones want to intensively develop. I'd hope that we make that a personal question that you ask either all of the- residents or shareholders, whomever. You can't make presumptions just because someone has moved out. You make that distinction an urban rule and it's not -- people even when they are in urban areas still have lots of those interests that aren't always -- simply moving to Dillingham or moving to Anchorage, doesn't mean you automatically want to build the coal mine. So you have to look at it closer than that. The other thing I wanted to see if Mr. Taylor could develop. He said that he's concerned about village corporations becoming closely held. Well, I would say that we -- most of our corporations are closely held already.So, if you have some kind of fear there, I wish you and Mr. Fessler -- Professor Fessler could develop that because, I mean I represent corporations with only 32 people in them, that's not exactly a public corporation and even those like my own that has 300, there's five board members who essentially only represent -- I mean -- well, that represent the three major family blocks in that village already. So I would say that we've got closely held corporations now. Is there something really to be concerned about or does that add to some dimension of what.we're talking about here?



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MR. TAYLOR: Well, I think thepoint being made is they'll become even more closely held and when we've tried to deal with village corporations in helping them plan in doing the kinds of things that they want to do, the more closely held they become, the greater the probability is they either become extraordinarily flexible or extraordinarily inflexible. There's no medium road when you're trying to work with a closely held corporation. It either goes or it doesn't go and that's the end of it right there. And so that's just one of the kinds of problems that I foresee, as you become even more closely held. That doesn't lend to the kind of flexibility an organization really needs to survive long term cycles. Dan!

MR. FESSLER: At the presenttime, Alaska corporation Law does not know such a creature as a closely held corporation. Right. I mean it's an unrecognized species. The new model business corporation act that has been widely discussed continues the non-recognition of closely held entities. The term "closely-held corporation" is used, I think at this -- in this meeting in a slightly different context than it is normally used or used in other discussions where we're talking about a situation where Liz and I wish to form a business that in all other respects would be a partnership but what we would really like to have would be a "heads -- we win and tails -- all our creditors lose," situation because we want limited liability and so we form a corporation. We also wish to be given an indulgence wherein we don't have to observe any of the normal norms of a corporation, we don't want to have to have board meetings because it would be just the two of us, we don't want to have to have elections of the board because we would be voting for ourselves and pretty soon you get to think, well it's all being done with mirrors and it's all sort of silly and all we really wanted was limited liability and so that is what many people think of when they're talking about closely held corporations. It poses for a state legislator a broad ethical



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problem as to whether they just want to sanction that type of behavior by people generally as opposed to the notion that there are corporations that have very few shareholders and in that sense are closely held. And what I think that is being articulated here is, what we're talking about is a shrinking shareholder base, the more people who sell their shares to the corporation, what will the corporation do with the shares that it has acquired in this manner and may have had to part with hard assets in order to acquire. Well, it can't vote them. Theoretically it can be reissued, which may be one way to handle the problem of those people born after 1971 that sort o:-f pre-permitted...

MR. BERGER: Excuse me, Dan,leaving the people born after 1971 out....

dwindling body of shareholders...MR. FESSLER: You have a

dwindling.body of shareholders and therefore those individuals who have not sold out to the extent that the assets still remain are more and more firmly more in control of those assets. And your point and several others have raised that they may be able to treat the assets, being the subsistence lands as a means of discriminating against other people, say, "Well, you're not a Native anymore, you can't hunt," etcetera, etcetera. I mean, I can only began to imagine the horror that would be brought up. But if you do, sir, take away the land, haven't you also taken away -- and if the land can't be affected by the corporation, then the corporation has lost virtually all of its ability to have any disciplinary force upon the population or the area. Because if it can't determine what happens to the land, and that

MR. FESSLER: Yeah.MR. BERGER: ...I don't think

that it's contemplated that the shares could be reissued.MR. FESSLER: No.MR. BERGER: You simply have a



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is the basic long term concept of putting the land in present corporate title, not giving it to individuals, then you have that problem. What is the corporation for, after that if we succeeded in breaking off and saying that the land couldn't be sold by any institution.

think of Glen's statement earlier is exactly what you've stated. To take out of control -- take the land out of control from the corporation so that in fact if the corporation's in trouble for example, it really cannot utilize the land to bail itself out unless, or specifically unless a group allows it such as an -- a traditional counselor, cooperative or whatever, that everybody would belong to. Now, in that specific issue, one of the real vigorous discussions we had in one of our retreats was the use of land by the remaining residents of villages. Kind of speaks of to the point that Liz was bringing up about specific villages, some that have a lot of the remaining stockholders still there. Others that have a small percentage and a lot of them live in Dillingham or Anchorage or wherever.

threw it onto the table I mean, at one of the -- retreats was that, can we place some restrictions on determination of land use, such as that if the land is to be utilized, sold or whatever, that those that are still remaining on the land will be the determining ones. Of course, we got into a real vigorous and -- discussion on that. And that was kind of aimed at the point that you just brought up and what Glen has been bringing up, that in fact, taking the land out of the corporation is -- was exactly the point that you're bringing up, that is to take it out of control of the corporation, really.

MR. C. JOHNSON: May I answerthat partly?

MR. BERGER: Charlie.MR. C. JOHNSON: The intention, I

Now, one of the concepts that we threw out at that, or



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the corporation left?MR. FESSLER: Then you would want

MR. C. JOHNSON: Maybe, it may bethat it would survive and have -- be involved in some activities, for example, I know Glen’s corporation is involved in real estate here and other things, so -- but see the problem is with the corporation -- with the land being an asset of that corporation, if their activities should get in trouble, I mean, it jeopardizes also the land that's held by the corporation, and that is exactly the point.

MR. FESSLER: Most sure— - mostsurely, then, no. And if shareholders -- par shareholders, though they're no longer residing in the village and they're no longer leading the traditional life, have a voice, they may obligate the corporate land for enterprise purposes that are antithetical to the people who remain...

MR. C. JOHNSON: That's correct.MR. FESSLER: ...such as having

the big coal mine there. That's a separate and distinct issue because it might be financially successful and culturally ruinous.

• MR. C. JOHNSON: Correct.MR. BERGER: Yeah, I think we

should go to Tony, we've...MR. STRONG: I think -- I think

what I've wanted to add into the discussion or at least bring to the attention of the commission is a couple of points that really seem to be -- I never hear it discussed on any -- in a -- any statewide level but it's a real problem to individuals. And that is, during the registration process to become shareholders in the corporation, the process in which persons could designate themselves as members of a particular village or members or a regional corporation, left a lot of people very confused.


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Some people were living outside the United -- outside of the state of Alaska, going to school and when they filled in their form, this humongous sheet that they had to fill out to become a member, they put down an address which put — which made them to be shareholders, either at the regional level or in another village, simply because when they put down their current mailing address, they put down where they were at rather than at home, where home was. So, people who are for instance, who are -- who have been raised in the village of Klukwan are not •shareholders of Klukwan, Incorporated, they're shareholders of Gold Belt, they're shareholders of the Thirteenth Regional corporation, they're shareholders of Sealaska at large and have not been aware of any provisions to become shareholders of the village in which they live in.

That goes directly to some of the issues that we were talking about earlier, is -- "you're not a shareholder here, what are you doing? What are you talking about? You don't belong here, you're not a shareholder, why are you living in this village?" So, and it does present that kind of difficulty and then the other issue that was presented by the Claims Settlement Act was the definition of what a village is. There were at least two villages in Southeast Alaska who wanted to be -- to receive this status of village corporations. They wanted to be able to incorporate a village corporation and receive the benefits of the Claims Settlement Act. They were denied that right by definitions within the Claims Settlement Act. One is, is whether or not that particular group of people are Natives any longer or whether there's a village there. Certainly the village or the village in Haines, there's a village down on the waterfront, it'd been there all of my life, you know, there's stories that go on forever including current people who live there and they call themselves a particular tribe and they applied for status under the Claim Settlement Act, to become a corporation and to receive benefits, the 23,040 acres and they were denied that, because



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under the Claims Settlement Act it said, there was a provision in it that said that the corporation or the community had to maintain some kind of integrity as a Native community. Also the village — so, because of that definition they were denied administratively, denied the benefits of the Claims Settlement Act and are now holders at large, shareholders at large in the regional corporation and they don't, I mean that the basic community has been affected by it. And then another village in southeast Alaska where it had been a traditional village applied for status and they had the minimum of 25 people who had applied and everything, but they were denied as well, the ability to participate in the Act as a village and develop a village corporation, so I think that -- I'd like to -- I don't' know where this fits into this discussion on these resolutions, 'cause-it is -- and it -- but it is a problem that was raised by the Claims Settlement Act. It's somewhat of a 1991 problem, 'cause it's part of the Claims Settlement Act problems.

MR. BERGER: Yes, David Case andthen Bart.

MR. CASE: Just to amplify whatTony just said, I think there are probably -- frankly four village communities that I can think of in Southeast, that sort of fit into that bill, but Ketchikan is the obvious urban area that is a continuing -- there's some continuing frustration there, I think, that's having been excluded from the Act. But there are other communities as well where there's -- the issue comes up and I think Seward and Valdez, maybe others. And indeed this may be an issue that -- and although I know that has been said that there will be no more land and no more money, I guess the question ought to be asked, are -- is it possible -- at this -- even at this late date to correct, what seemed to be injustices?

MR. BERGER: Bart and thenCharlie.



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MR. GARBER: I had just one otherto -- and try to -- and hopefully that it -- keep it hooked into this idea of being able to buy back stock and how does this affect control and whatnot. It -- there's an irony here in that one of the earliest proposed reasons for keeping the settlement vehicle a corporation, was to ensure the right to be mobile but still be able to participate in decisions of what happens in the local area with regard to land use, so that if you were a shareholder and you could participate in a corporate body that could be anywhere and yet still own lands in a particular place, that in -- that allowed Natives then to move to Nome, to Barrow, to Fairbanks, a local area and yet still be able to participate in the decisions about their home lands. Like Tony said, that same criteria wasn't afforded to the process of determining who would get claims. If you were mobile before that usually meant that you lost status, so that if you were mobile after, that's fine, that's what we want. But if you're mobile before, you lost. I am in the process of fighting for one just like that and before I was with Seward, with a small group, but -- and the other thing is that just -- it'll -- that's fine -- I'll leave it at.

observations and then go on to the next resolution.MR. C. JOHNSON: Okay. First,

couple of observations, you know, ANCSA is replete with these horror stories about the enrollment process and I think one of the things we don't address in the resolutions but has been brought up and you've probably heard it in your travels and I hear it occasionally with my own stockholders and is -- look, I'm enrolled -- somebody will sav, "I'm enrolled in Sitnasuak and I really should be enrolled in Shaktoolik. Will we be able to go back to where I really should be enrolled after 1991?" We don't

MR. BERGER: Okay, Charlie youhave the floor.

MR. C. JOHNSON: Okay.MR. BERGER: You make your



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address this yet. I don't know yet how we're going to do that, but it's certainly one that needs to be addressed, not only in the context that Tony has brought up, but in fact of transferring from really where you feel you should be and where you are registered. And in fact, I was Outside,. I was living in Oregon at the time of the process of enrollment and luckily I put down my home villages and my mailing address. My father who was visiting me put down that he was -- that his mailing address currently was Portland. So he ended under [Region] 13. And unfortunately he died before he could transfer -- you know, he could get that corrected. So I am -- I now have inherited the shares in the 13th as well as my home village.

But, I mean the stories about that are endless- and if perhaps, in some point, we can correct that with some of these resolutions. I'd like to introduce the next three resolutions kind of because, they're all related. I'm not gonna be here this afternoon, so I'm gonna ask Glen and Marlene to lead the discussions on land. The next resolution, [84]-04 is intended to allow the inclusion of newborns that were born after 1971 and allow some special provisions to the elders by issuing them additional stock -- of preferred stock or changes -- a changed stock of some kind.

The resolution [84]-05 is a resolution that would prohibit the transfer of stock to non Natives. And perhaps, while it doesn't specify a use of the method that Tony has suggested of life membership or -- I can't remember the term you used Tony, but something -- life estate stock or something like that might be a method to -- a way to implement that particular resolution.

Resolution [84]-06 would allow the corporations to extend the benefits, of voting and other benefits to those that are descendants of Natives.

Now there's an important assumption in both [84]-04 and [84] — 06 and that is that the agreement reached in 7(i), applies



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after, you know, irregardless of the number of people that would be included in any future expansion of the corporations. As I mentioned earlier, the 7(i) agreement that we've reached between regions freezes the level of distribution percentages at the original enrollment numbers so that if I'm receiving income from the Bering Straits or funds from Cook Inlet or Sealaska, irregardless of how many stockholders they have in the future, my percentage of little over eight percent is not going to be affected. We got into a very vigorous argument about that again, in discussing the amount of the blood quantum of those that should be included. And when we finally got to the point that it doesn't make any difference to Bering Straits how many shareholders Koniag has or Aleut or Bristol Bay because it's not going to affect any revenues I get from 7(i)- Then it's not going to affect us, period, if in fact Koniag allows those that are three-sixteenths or one-eighths to participate in their corporation, it's not going to have any affect on us at Bering Straits. And neither would any changes in our enrollment have any effect on other corporations and that I think --we finally reached an agreement on the blood quantum level. If it wasn’t going to affect us in a -- between corporations, that it doesn't make any difference then, the level of blood quantum that is required for participation. And -- so going back to the one -04, the resolution, I'll read it. "Be it resolved that the Alaska Federation of Natives, in convention assembled, endorses the concept that ANCSA should be amended to give each corporation the option of offering additional stock to Natives, leaving the price, if any, up to the corporation and eliminating any liability for issuing stock at low or no cost."

is that by issuing additional stock at low or no cost, we're decreasing the value of those that are currently stockholders. We're diluting their value. The counter argument to that, that we got into was, what right or what did we do as current

One of the arguments that we got into that's obvious,



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stockholders to benefit -- to receive this benefit of owning stock? What did we do any different than those that were born after 1971? The only difference is the date. And the argument is that our land has been held for us by our forefathers for generation after generation and a continuing process that we should not eliminate in one generation, by this 1971 deadline that -- or those born after 1971 have as much right being born Native as we do, to participate in the land and the benefits of that land. That's how we -- the two arguments that came here. The settling argument on that is the one that I mentioned that it's not going to affect -- between regions, the numbers since we've frozen the participation percentage of any revenues, from7 (i) . •:.

So, one of the -- I might add though, before everybody gets into the discussion, is this, for, I think us, we that are in Native corporations, that at AFN, perhaps the real benefit here of this discussion is the amount of legal expertise and the advice that we're getting at little or no cost.

MS. E. JOHNSTON: It's worthevery penny, isn't it?

MR. C. JOHNSON: Yes.MR. BERGER: Well, I think we can

look on that as a compliment. I think Glen and Gary wanted to say something about this.

MR. FREDERICKS: You were telling-- discussing that -- what would happen if 7 -- if we know that we want to tie 7(i) to the existing shareholders? What will happen then if we all -- I mean eventually, die off and no more 7 (i)? I mean is that the idea? It would do that, wouldn't it?

MR. C. JOHNSON: No, theintention of freezing the 7(i) participation percentages at the original numbers, is like for example, Bering Straits receives a little over eight percent of 7(i) revenues in -- of the whole group. I meant of all Alaska Natives. Now, we're going to

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receive that according to the 7(i) agreement, irregardless of our numbers after that because, you know our numbers have swollen from 6300 shareholders to like something like 7100. And it's because of the inheritance. When somebody dies and they got eight kids or you know or whatever. So our actual numbers have increased, but the number of shares we have is still the same.And it was the intention at the 7(i) negotiations that we freeze it at that level. That one -- and that was kind of an understanding that there wouldn't be at any -- or there might not be any expansion of the Act -- actual numbers of shares. There might be an expansion of the number of participants, you see.

MR. BERGER: Gary and thenElizabeth.

MR. ANDERS: A question regardingthe distribution of stock to people born after 1971. Do you envision this to be a continuing process and if so what kinds of criteria are going to be used? And the second point is -- I have some difficulty understanding this, because I think it's all ready a controversial one with regard to the effect on the maintenance of control. You know there's a very strong tendency -- I think that literature bears this out for private corporations to become more public over time and by creating either different classifications of stock or reissuing the same kinds of stock to new shareholders, you're enlarging that stock base.

MR. C. JOHNSON: Okay, you know,we had a lot of discussion on that very same question and some suggestions were brought up such as the one that Tony put out, was, that a life membership or a life estate type of stock, that would revert back to the corporation or would die with the person when they died, would be the way that we would go. It would be similar to a membership in a tribe. I mean the tribal membership is not something that you can dispose of. And the discussion about including those born after '71, it was similar to that



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concept. Now, granted it needs very -- a lot of work and it needs some real paring down and definition, but that was the intention. Not so much to continually develop a widening base of stock. If we did that, I mean we'd have -- how many -- 100 millions of shares at some point. The intention was that...to develop some kind of stock, like the life estate stock that Tony has mentioned or something similar to that. Also, in one of the other resolutions it -- we ask for the ability to transfer assets to a related Native organization where life memberships would be given out that were non-transferable. So, those maybe should be tied together and that discussion should also apply this, afternoon when the discussion on the transfer of assets to a tribe or a IRA or coop or whatever type of organization that's set up?

MR. BERGER: Elizabeth and thenTony.

MS. E. JOHNSTON: Charlie, I justhad two questions for a point of clarification. First of all, you mentioned that you're gonna draft, so that 7(i) isn't affected. I assume you also mean that you'll draft so 7(j) isn't affected, so that as village corporations do or do not enlarge their shareholder populations their percentages too, would be -- remained set.

MR. C. JOHNSON: Yes, when wespeak of 7(i), we also generally include 7(j), also.

MS. E. JOHNSTON: And the secondquestion I had, just had to make sure that I understood this, on the new Native, whether or not a corporation issues stock to new Natives is optional, is that correct?

MR. C. JOHNSON: That's correctand in fact, all of the resolutions here are options rather than mandates.

Bart.MR. BERGER: Yeah, Tony and then

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MR. STRONG: Thank you. Theother question -- I mean, something that was brought up to me and I'd -- I guess a lot of it of us have been asked of this question before but it's not a part of the discussion yet, is what about those older Natives who would be new Natives had they registered to become shareholders but by some reason reason they didn't register. They're Natives or they're, -- they meet the blood re -- quantum requirements and somehow they didn't get registered by 1972 or '73, when the cut-off date was. They're not participants in the Claims Settlement Act and these resolutions don't address that and I was wondering if there was gonna be some method for getting those people to become shareholders.

discussions on this particular resolution [84]-04, there were three classes of people or -- I guess we can call them classes of Natives, I guess now. Those that were born after 1971, those that did not register for some reason, no matter what reason and elders. And the intention here was to include those three groups of Natives that we felt needed to be -- and everybody has felt needed to be included in the land claims benefits.

of questions are -- and point out some things. I don't like ringing my own bell, but this discussion -- the prob -- the conflict that you're having here, then, is whether we want to continue with the typical kind of distribution of assets under corporate system with private property rights as the basis versus how much. That conflicts with our idea of sharing the assets and distributing out to everyone. I don't think that we ought to look at -- I mean we can say that we'll either, or: we'll either have pure distribution or under corporate law private property or else we're going to spread it out to everyone. There are places in between. And what we're talking about is, what kind of different distribution systems can we have so that we all

MR. C. JOHNSON: Yeah, in our

MR. BERGER: Thank you. Bart.MR. GARBER: Yes, just a couple



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participate and still feel like a community. I mean, there's Professor Fessler and some other corporate -- may be able to talk about the idea of making different classes of stock so that -- right now under corporate law you've got preferred and common shares...

(NOVEMBER 15, 1984)(OVERLAP TAPE, SIDE B)MR. GARBER: ...share. You could

make all original issue of stock preferred and give them a right to a certain guaranteed distribution. Because the problem you have is that, over time...

(NOVEMBER 15, 1984)(TAPE 6, SIDE B)MR. GARBER: ...you have the

diminishing value of your share because of the increasing number of people. And then new people who come in or else a second class of stock, you could call it common stock or whatnot, gets a certain set percentage of what's left of whatever distributions you have after that. I mean that's somewhere in the middle, so that you guarantee the first body a guaranteed returned and they can go ahead and distribute that out to their kids and whatnot, however they want it, because it always remains preferred stock. And yet, you could still stop everyone from being able to alienate it if you want, because that's the problem that we have that we're talking about with individuals being able to replace themselves with non-Natives or people who we don't want to. The other thing -- the other question I have -- in discussing the elders' resolution, was it intended -- I know that and there's no -- I don't want to upset anyone but, was the idea of the elders -- the body of people who existed in 1971 or the idea of elders as a ongoing thing where we will make it a permanent idea that we always do respect elders today as we will in 2000. Because, I mean if you'll forgive me, there will be some people who become older in 1990 who may not exactly be our idea of traditional kind



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of elders, but they will be, you know, the very successful corporate folks who have a nice pension and if we want to make this a permanent distribution system or if we're talking about a -- you know, honoring those people who we thought of as traditional elders who existed at a time because they haven't been able to benefit from the Act, because in the first 20 years we haven't had -- made --we haven't made money and were -- they're gonna die before they get anything. Could you -- is it an ongoing thing we're talking about or -- is that's a possibility I suppose. A permanent change in the distribution system.

the intention here was that elders will always be with us and those of you that will grow older will benefit someday. Are those of us, I should say. And that we'll always have that -- our elders with us and that we'll be able to provide for their needs at some point. Ironically or -- I don't know whether it's ironic or not, you know the benefits of the Land Claims Act really have fallen to only a few. And that few are those of us that are employed by the corporations. The primary economic benefit has been to those that have been employed by the corporations and it has not fallen to the general Native population. And we need to accommodate that or take care of that in some way. So, I think the intention here is that the benefits to elders will be a continuing process. Now, -in -- actually to your earlier statement, I just have a question of the ability to create specific classes of stock and you asked Professor Fessler that question about creating, maybe a preferred and a common stock class. Do we -- I was kind of under the assumption that we would have that power anyway after 1991 if nothing changed and I perhaps need to be clarified on that.

considering was not when we could do it. I mean we could do it. before it we got special legislation. We could do it after, even

MR. C. JOHNSON: Well, I think

MR. GARBER: The main thing I was



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without or -- you -- with shareholder approval. My question was, is there some system that exists no matter what it would take to enact it? What are the variations in between giving everyone an absolute equal right versus what we have right now, which is only one set body as of right -- what are the options in between and then there's a secondary issue, we can ask when and how we can do it.

MR. BERGER: Yes, Dan Fessler.MR. FESSLER: Sure. You have

tremendous latitude under Alaska State Law, either existing or as proposed by the -- in the form of the bill that I have been working on. Your choices are not even restricted to something called preferred or common stock. You can have 10 classes of common stock if you want. You can have one class of stock and divide into series, which is a traditional way of recognizing when people came on board. The only thing that is required is that you must define the rights and privileges of the various classes or series of stock within the Articles of Incorporation and to change the status quo as we discussed a few minutes ago, that would require amending the articles. But, I can't stress again that there are doubtless vexations and a lot of unpleasant consequences of having to deal with this whole problem when in the corporate context -- and I certainly sense that before and I'm getting it enhanced since now. There are a lot of opportunities that you have to determine your own future, even with the specific corporations themselves. And the articles are how you're gonna do that with regard to stock. And all you want to do is make certain that you have somebody who's drafting those articles, helping you and what are called the indentures, which is the basic statement as between those shareholders and the corporation of their right, that that indenture is a very well-drafted and understood document. Not just from legals but, so that it's drafted in the language that people really understand what's happening.

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MR. C. JOHNSON: Okay, just tocomment on the points that Bart has been raising, are the types of discussions that we went through during our retreats. As you can see, looking at what we've been discussing, you know, as Native people we want to, perhaps, have our cake and eat it too, in that we want to be able to engage in some economic activity that would benefit us. Yet we also want to be able to maintain either a tribal identity or some identity that is not dependent upon membership in a corporation. And the dilemma that we have gone through and how do we accommodate that, I think one of the other resolutions kind of addresses that particular dilemma and that's the last one that allows us to transfer assets. And because of that dilemma it places -- as you've stated, on us a tremendous burden of not eliminating the possibilities of us going either way and it's a difficult situation for us in drafting the type of legislation that we want not only to satisfy the legal requirements that you're bringing up but to satisfy the desires of our people whether they're living in the villages or in the cities.

MR. FESSLER: With respect to thetopic again -- which just as a technician, I wouldn't dare go near how you want ‘to_ subsequently define, who is an elder? Or whether that is to be a continuing process. I simply point out that at the time, if you decide to go stock classification as a means of accommodating such worthy people, that you have the perfect prerogative to define who is going to be now or in the future entitled to this stock, by simply drafting carefully the share indenture and the amendment to the articles. And then that will set in motion either a group of people who are now but not in the future or a group of people who will be perpetuated as they qualify for whatever you set down. You have such tremendous opportunity to resolve these problems internally.

MR. C. JOHNSON: Can we do thatnow under current state law?



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MR. FESSLER: No, but after 1991if Congress didn't do anything, you would have plenary power to do that. Now, there is the further problem that you made me sensitive to and that is the concept of getting some of the big major issues of corporations. Especially among the regional corporations if they're all sort of similar. And of course, by saying that a corporation can do this in its articles, I'm also saying that 13 corporations can have radically different approaches to this matter.. And whether that is a culturally or politically acceptable concept is something for you to determine and not for'a technical lawyer.

MR. BERGER: Could I ask aquestion that I think Tony asked, but I didn't, I --under resolution 84-04, I believe it is, you can issues shares to new Natives -- leave the elders out of it for the moment -- and you can do that without consideration. That is a corporation could decide by an appropriate majority of its shareholders to issue a hundred shares to each child of shareholders who was born after 1971. And what did you say about those shares that they would only be shares that would be held for life. Did you say that?

MR. C. JOHNSON: No.MR. BERGER: Oh, I'm sorry.MR. C. JOHNSON: What we're

discussing was the following resolution when I mentioned that. Now, the point could also apply here that, you know, the new shares that are issued would be life estate shares or whatever you'd call them. That's one of the solutions that's been brought out and it may not be the solution that is taken but it's certainly something that I think needs not only more discussion, more research and perhaps drafting. I don't know that.

MR. BERGER: Yeah. And the ideawas, I take it, that the rolls would be permanently open so that after 1991 each child born then would get a hundred shares.



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MR. JOHNSON: That's correct andthere is two ways -- I think that we've discussed doing that.One is this resolution, the other would be the one where we would transfer assets to a related Native organization, tribe or co-op. And if you're a tribe -- IRA councilor, traditional council or whatever, you're a member by...

Native, and the intention there was to perpetuate Native control and ownership over the land as well as the assets of the corporation.

just curious how this issuance of shares to new Natives would work and if you use the corporate thing, corporate structure, you would be issuing, theoretically a hundred shares to each child as born. The rolls would be permanently open and it would be an incident of ownership of shares in that corporation for the individual shareholder that there would be continuing dilution of the value of the shares. The idea being there would be no compensation for...

true unless we went to some solution that .-- like Tony has mentioned. Now, one of the things that you notice in this, is that I think the reason for the hundred -- the shares issuance, it's kind of a matter of semantics since we're still talking corporate organization here. I mean we could have easily said membership and in fact, the last resolution does say membership rather than shares. Benefits to members and where everybody would be issued a life membership. It doesn't say anything about

MR. BERGER: Yeah.MR. C. JOHNSON: ...being born a

MR. BERGER: Yeah. No, I was

MR. G. JOHNSON: Yeah, that's



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a fairly a substantial proportion of Alaska Natives live in urban areas and it seems that if you're attaching priorities -to the utilization of the land and the maintenance of stock in Native hands, one consideration might be that over a couple of generations there might be not only dissolution of the stock but increasing inter-marriage between Natives and non-Natives and that would present problems in itself with regard to the transfer of voting rights and other privileges that belong to shareholders. Another consideration, and I think that this is very controversial and I don't know the answer to it, is whether or not some of these important issues are going to be resolved in and of themselves through the natural attrition process. In other words, what happens when a person dies, what happens to their stock? In increasing the size of the stock and leaving the assets fixed, you diminish the value. That's very obvious. But in maintaining the number of shares outstanding but distributing them throughout the family you increase coverage at the same time you maintain the integrity of that corporation's ownership.

say that in some way the problem overall -- looking over all of the resolutions is whether it's correct to have a large -- and I mentioned this to Bart, yesterday -- a large umbrella of options or whether there should be a narrower set of options. Is this -- it seems to me the point of these resolutions was to provide a wide array of options with -- the -- how -- the question about how they're used in establishing a policy for 1991 being up to each corporation. It seems to me there may be a fundamental question about whether having breadth is a good or bad thing, etcetera, etcetera, but that really, I think, is the underlying philosophy your -- and an effort being made within certain constraints to provide as much flexibility as possible.

MR. BERGER: Monroe Price.MR. PRICE: Yeah, I just want to

MR. BERGER: Yeah, David Case.



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MR. CASE: Will you be back thisafternoon? You're still on the agenda.

MR. PRICE: No, I won't be. Iwon't be able to.

MR. CASE: Okay. I mean I --maybe we don't want to do it now but I want to -- would like to explore what you mean by the -- whether there are advantages or disadvantages to having breadth and not having breadth.

MR. BERGER: Well, you -- Monroe,you'll be back.

MR. C. JOHNSON: What do you meanby -- well, I didn't understand the question.

MR. CASE: Monroe said that theseresolutions were designed to give a broad range of options, but that it -- there may be questions about whether giving a broad range of options is a good idea and that having a narrow range of options might be a good idea. I don't -- I'm not sure -- I would be interested in knowing what the question is. What are the considerations if you were choosing between a broad range and a narrow range of options? What do -- well, you know -- what do you have in mind?

MR. PRICE: It depends on how"bizarre like you want to be.

MR. C. JOHNSON: The -- ...MR. CASE: Okay.MR. C. JOHNSON: ...in reaching

some unanimity of support for the concepts, we in fact had to broaden the options because of the diversity of the regions and the villages that are involved and by allowing a broader range of options we were able to get broader support and that's the reason for their breadth, not because we wanted to leave it loose. In fact. I would have preferred to make it much tighter but we're different in our region than some of the others.



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ohMarlene.

MS. M. JOHNSON: (Off mike) Ijust want to just speak to Tony. He said that the omitted Natives and that is covered under 84-04 and the -- that's the reason we use the word on the bottom that said "Native." Because we didn't want them saying the new Natives, elderly Natives or omitted Natives, we just said Natives or descendants of Natives. Because we will argue "Natives are Natives".

that's a phrase destined to take it's place in the lexicon with after-borns, but -- well, thank you, Marlene. I think that we should stop and if you would allow me on your behalf to thank Charlie Johnson for coming and leading the discussion. We appreciate it, Charlie, and we'll carry on the discussion with Marlene and Glen this afternoon and Monroe to be their legal backup and the Fessler-Johnston duo over here to shoot darts at them. And maybe this afternoon we could just consider for a minute the question of dissenters' rights and the 5th Amendment, to make sure those are not overlooked and then we could turn to -07 and -08. Those, I think can be treated together and that will take up a good deal of our time, but it seems to me it'll be a useful discussion and I just like to carry on with it and I hope that, like Claude and Glen, people from the villages will feel free to participate. Don't let all this high- powered, but at the moment apparently free, legal talent, overwhelm you. And we'll come back at 1:30, if that's okay. And we'll send you the transcript, Charlie, with the rest of the free legal advice in it.

don't we start then. I thought we might, this afternoon before we take a look at the other two resolutions that Charlie left

MR. BERGER: Omitted Natives

ADJOURNS RECONVENES:MR. BERGER: Okay, well, why



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with us, we might just spend a brief minute or two considering the questions of dissenters' rights and the 5th Amendment and what I understand that that entails is the proposition that the rights of dissenting shareholders under common law and Alaska State Law should be at an end, that is they would not be entitled to be cast out even though they didn't wish to go along with some of these measures and of course, there's the related question, I think of whether or not the diminutive in the value of the dissenting shareholder's shares is a taking of property without compensation under the 5th Amendment. I don't think we need to be detained very long on those questions, but I think we should at least hear something about them and maybe you could -- I could ask Dan Fessler and perhaps Elizabeth to address the first and perhaps David Case and Ralph Johnson to address the second. Just -- just didn't -- I hope I've made it clear what I'm talking about and if you could carry on from there, perhaps each of you might say a few words about it.

would be better if Liz were to make the initial response because she simply knows a great deal more about Native corporations than I do.

response will be -- should be -- perhaps, listened to, not just from the point of view of a legal perspective which, of course, it will definitely betray, but it also springs from a particular fact pattern, which is Bristol Bay Native corporation. And the fact that in an institutional or political sense, that we have two major divisions within the corporation. Sixty-three percent for restricted stock, 36 percent for unrestricted stock and how one as a management group must pay attention to both of these -- it's hard to say one is more legitimate than the other. Okay! They're both coming out of the shareholder group. And to say that you can -- that you may or would wish to ignore one-third of

MR. FESSLER: I think that it

MR. BERGER: Okay.MS. E. JOHNSTON: Okay, my



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your shareholders is not a situation or it is not a position that I wish to speak for.

In my view, it would be extremely wise to have within the drafts that go to Congress (and I believe it is at the Congressional level that the restricted stock issue must be taken care of) that it would be very wise of the Native community to have one of the alternatives in that draft, even if everybody didn't want to go that way, the opportunity for dissenters' rights. The reason I think that would be wise is 1), my legal perspective, which I said would be betrayed in this answer. My legal perspective is this, that in 1971 when the Act was passed, the right to have freely alienable stock in 1991 vested. I may be wrong on this, okay, but this is my perspective. And because it's vested, in my view the only.way'you can deal with that to move toward the continued restriction is to have a combination of the shareholder waiver and for those shareholders who chose not to waive, that those shareholders would have the opportunity.Not that every shareholder would exercise that opportunity by any stretch of the imagination, but...

MR. BERGER: Waiving what?MS. E. JOHNSTON: I'm sorry,

would waive their right to have unrestricted stock in 1991. In other words that you would have a legal event, a vote at a shareholder meeting where this operative mandatory legal event would take place where shareholders could chose to waive or not to waive. And I will, for purposes of discussion, assume and also because of the results of the survey, assume that the appropriate number of our shareholders did waive. Those who did not waive then would have the opportunity for dissenters' rights. This is the procedure that I feel makes some legal sense. I feel it would cost Bristol Bay something, but I feel that it would be good to pay it because in the long run it is my belief that to do that is the most conservative posture I can suggest in order to have the statute ultimately withstand the constitutional



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challenge. And by that I mean that one of the things that sort of horrifies me is the thought that we could develop a scheme today, whereby we said to all of our shareholders, "Look, we're going to protect you, we're going to have restricted stock and we're going to do a variety of things with the land or create potentials for doing a variety of things in the land." And then later, when a well-financed effort -- well-financed effort came along with good attorneys on the other side, the protection was stripped because the constitutional issues had not been adequately taken care of. Professor Johnson and I have talked about this briefly and may not be of the same mind- set on this. But, I think that -- you know and as I may, as I say, I do not believe I'm wrong as a matter of law, but so what. Who cares if I'm right or wrong! I will tell you that it is my perspective and I will also tell you that I think the most conservative way to deal with a constitutional challenge is to protect yourself against it so that you're in a posture that says, even if the rights were vested in 1971 we have proceeded in a way where we have taken -- where we have balanced those rights where people have waived them and we balanced them in the same way the normal corporate structure does. So, so what if you prove if they're vested, we have appropriately taken care of them and people have been compensated as was the value of the stock. Now, that's my legal perspective and -- but my political perspective within, again, the context only at Bristol Bay Native Corporation is this: that I do not relish the idea or management, frankly, saying to one-third of their shareholders, "You can stick it in your ear, I don't care what you want, 63 percent wants something else." On something this vital, I think there need to be -- I don't know whether we call them safety valves in a political sense or where we call them an appropriate listening to a significant se.gment of your shareholder population. I don't know how to express this very well. But it is in my view, in Bristol Bay's case, that it would be a real mistake to just say, "Well,



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all that matters is the 63 percent that are going one way." That's perhaps a longer answer then you re- -- it's more than your two-minute answer.

MR. BERGER: Yeah, well, no. It was like all your answers. Very, very good. But, just to make sure I understand what we're talking about. The minority shareholder -- your 37 percent or whatever they are, has certain rights under common law and Alaska State Corporate Law to be cast out if he doesn't go along with the majority. That's the first thing I think. And the second thing is, well, even if-, he has no rights under the law, he has certain rights under the 5th Amendment not to have his property taken without just compensation.

MS. E. JOHNSTON: I believe thatin a legal sense, the 5th Amendment comes in to play and again there are other attorneys here who can -- who could correct this statement, but I believe the 5th Amendment only comes into play if you assume that certain rights are vested. I think that's the pivotal question here and I -- and as I discussed, I, assuming that the right to have freely alienable stock in 1991 is a vested right rather than a inchoate right. If you got into the inchoate mind set or assumption, you might come out totally different on the 5th Amendment question. So, it's like a threshold -- I'm, am I saying this right, Ralph, it's like a threshold question and I've come out one way and some other attorneys would come out another way. ......

MR. BERGER: Did you want to addanything, Dan?

MR. FESSLER: No, just again toput the thing in its broadest possible prospective. The normal idea in a corporation when you take something at a shareholder level is that the majority rules. And if you're in the minority, you either bide your time until there's another opportunity to elect directors, in which case you hope that you'll more



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persuasively make your point heard and wind up in the majority and if you have despaired of an ability to do that, then the normal situation is you have the option to sell your stock. Now, when you cut off the option to sell the stock, you begin to make a fundamental challenge to the whole idea of how corporations run. And the idea is, are you now locked into the situation?

set of circumstances in which the minority finds itself able to demand of the corporation that the corporation unlock the key, give them something in exchange for their shares and let them go and that is if the corporation has gone through what we've been describing as an "organic change". There’s been a merger or a consolidation, then by statute you must recognize the concept that there are dissenters' rights. The dissenters' rights that are put forth in the statute are very difficult for most people to comprehend and you have to be very careful of an individual shareholder to preserve them, lest you lose them. But, the issue that would arise from the -- just the most corporate perspective, for I am no scholar of the Constitution of the United States at all. And from the corporate perspective is, would it be wise to recognize that there's going to be a possibility, maybe a probability of litigation on this issue. If you succeeding in getting the prohibition on alienability in stock perpetuated, so that you've cut off the power of people to say, "I don't like what's going on and I'll just sell out, please." And then you propose that people are captured and they have no escape. Especially, when as -- and this I think is the point that Liz keeps stressing, if you were to read existing law, although people didn't buy their stock which may be the point that needs to be developed. Although people didn't buy their stock with the expectation that they could alienate it after 1991, the Act said that the restriction on alienation would expire in 1991. And if Congress is confident to change that rule now, are individuals going to be able to assert some status to say, "well, fine, you

Well, in Alaska at the present time, there's only one

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can do that but at least you owe me compensation for extinguishing the expectation that I had." The weakness of that position of course is, that you didn't pay in the traditional sense, for that expectation.

MR. BERGER: Ralph Johnson, didyou want to...

MR. R. JOHNSON: Well, obviouslythis is not the time for the lawyers here to engage in a fascinating discussion of constitutional law, so I'll limit my comments to some general conclusions.

First, as to the division between the legal and political issues, I quite agree. I can give you and will give you a very brief statement of what I view the constitutional issue. That's quite different than the political issue and in one sense I like the idea of setting up a fallback position that dissenters would be compensated. I worry about another aspect of that and that is the dissenters who wish to continue to live in the same village and who wish to hunt and fish and cut ice and do other things on that land and having sold their stock, they have essentially lost their right to do so, so that no trespassing signs will go up to those who've sold out. And I suspect that in the long term that's going to be either impossible to enforce or cause a very high degree of conflict and dissension in the village community. If somebody wants to sell out and leave, then that's another matter, but that's a political consideration that I think that a lot of people here are more -- infinitely more informed to worry about then I am. But I wish to raise the issue.

On the constitutional issue, I guess just having gone through quite a bit of research on the question, I'm convinced that if Congress goes through the right hoops, does the right things, it can extend the inalienability of the stock. It can return the land to trust status. It can limit the voting rights of the stock and it can do all of that without the requirement of



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payment of compensation. It can do that without violating the just compensation law of the federal Constitution. Now, just about two minutes on that, cases that are well known in this field of recent vintage -- the case involving the Penn Central Railroad Station in New York. Another case involving a man by the name of Alaird (ph) who sold eagle feathers in Montana who was told in -- overnight that all of his thousands and thousands of dollars worth of eagle feathers were worth nothing the next day. And the Supreme Court said he didn't -- wasn't entitled to compensation. And there's more specifically a case decided by the Supreme Court in 1918 that changed the rules of Indian in the Lower 48 who held allotment land. He held allotment land that was free to be sold and the -- they changed the rules on him and said that now he has to have the Secretary of Interior's approval to sell his land. Well that changed the value of his ownership.

All those cases, plus if one looks at the plenary power of Congress to deal with Indian affairs, you add all that up, I guess I'm satisfied that Congress can legislate to terminate or change stockholders' rights in 1991 if they wish to do so.Whether that's wise to do so is a different question. But I think that we can start out, at least as far as I'm concerned, with the assumption that if Congress wishes to take such action, it can do so.

Well, I might add one other thing. And that is that, let's assume that Congress decided to use the fallback position and say that they would compensate somebody for -- in 19 -- let's assume this action were taken in 1987 and the stock would be able to be sold to non-Natives in 1991, - four years later. And you need to know now the difference in value in the stock in 1987 between that case A, where it's salable to non-Natives in 1991, four years later, or secondly where it's not salable to non-Natives or on the market four years later. I suspect it's going to be an extremely small difference in value at that point because there are so many variables that are involved in the

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value of the stock that, for example, who the current management is? What their investment portfolio is? What their record is of investment and management in the past? The price of rice in China? The price of oil from Tehran? All those factors get involved in that and to sort out and identify a particular value that is attributable to the salability of the stock on the open market four years later will be, one, exceedingly difficult and probably be pretty minimal. But that would satisfy the dissenting stockholders' problem as Elizabeth Johnston raises it.

MR. BERGER: David Case.MR. CASE: I just had one further

question of, probably of Professor Fessler. Am I correct in assuming, and it is an assumption, that dissenters' rights as dissenters' rights are not vested property rights. In other words, is it -- is there any constitutional question when a state or the federal government, as it all ready has in the case of Alaska, eliminates dissenters' rights?

MR. FESSLER: Not that I'm awareof. No, I don't know of any such case, but again I want to very carefully underscore that we're now talking about an area in which I have the peripheral side vision. And in attempting to work with a memory of a Constitutional course that is a distressingly long time ago, and so I would yield to the expertise on it'. . .

MS. E. JOHNSTON: You. did wanderlonger ago -- then you're willing to testify.

MR. FESSLER: That's fine, Iwouldn't want to be asked that thing, okay.

MR. BERGER: Roland Shanks.MR. SHANKS: Well, I just wanted

to throw a couple of things in here. I fear to argue with lawyers and I only argue with law professors with a lot of trepidation but anyway, there is one parallel that I think might be worth keeping in mind, especially when it comes to whether in

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fact, rights vested with shareholders when the Act was passed and that is in the past -- hey, on the last few years we successfully made the argument in many cases that selection rights were in fact the property right and that to take a selection right from a corporation without due process was in fact, condemnation.

Probably one of the better examples of that was in the railroad legislation where Congress said that it was essentially gonna extinguish 3(e) selections on railroad areas and we successfully fought them on the basis that that was the condemnation of our selection right. And in fact we had an Attorney General's opinion from the State of Alaska that said that. He left the Attorney General's Office not too long after that, but he's now our lawyer. But anyway, there has been several other cases a lot smaller and not quite as noteworthy as the 3(e) determination cases, but,

that, they.

took...

court?

but...MR. BERGER: When you say you won

MR. SHANKS: They essentially

MR. BERGER: ...did you go to

MR. SHANKS: No, they pulled theprovision out for fear that they would lose if it went to court. And we let them know that we were very ready to take it to court. So, anyhow that's just one thing that's happened and I think we might want to kind of throw into the back of our minds that we have all ready seen, kind of a tentative right that was given by the Act pretty much dealt as a property right. Not only- that, but our own corporations have made that argument. And I think to turn around and make the opposite argument, the percent of of our shareholders might be a bit awkward. And that kind of brings me to the next point and that is when dealing with dissenters' rights and going to Congress and asking them to essentially extinguish dissenters' rights. You know, I'm not a lawyer and I



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don ' t deal in courts, but I have been known to wander by a legislative hall once in a while and I think it would be an extremely difficult provision to sell to the U.S. Congress these days, that some potentially significant portion of the shareholders should just be told that they either take it or leave it. I don't think that the U.S. Congress is in the mood to do that kind of thing and I think that that is a real stumbling block that we need to deal with when we look at these provisions. I just, I do not believe that politically is gonna fly.

MR. BERGER: Dan Fessler.MR. FESSLER: Give me one

advantage of somebody that's in the meeting like this who is so obviously an outsider and who has no background at all,-.is that they'll blunder out and say something which perhaps people with better judgment would keep quiet about. But there is one thought and I would pose the question to Professor Johnson. I assume that at some point, it is conceivable that litigation will be mounted, that will have as its overt or covert purpose, challenging the wisdom and viability of the Congressional decision to make corporations the vehicle, the implementation of the Settlement Act. I assume that the Alaska Federation of Natives would want to pick and chose very carefully exactly whether it was gonna be in the upwind position when that situation happened. And I don't know whether or not that is particularly the battle ground that I would chose on this issue. At some point the Supreme Court might get asked to decide when Congress decided, after all of the twists and turns of federal Indian policy and the many sad stories that could be appended to that history, to use the corporation as the .-vehicle for the Alaska settlement and then to say that shares were alienable, and indeed the peculiarities were going to be taken off after 20 years, that that involved a Congressional decision that after 20 years the corporation would have served as a vehicle wherein people would have entered the world with these assets and with



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the machinery in place and that all prior history about the prerogative of Congress to change its mind and whether individuals have acquired status as opposed to their historical tribes, etcetera, etcetera, that all of those things would be caught in jeopardy on the day that that question is posed in that form and whether we could be very confident of the outcome.

view is that we could be confident of the outcome. There -- the Supreme Court in recent years has taken the position without reference to the Indians, but with reference to what they call future anticipatory benefits from a transaction, business benefits that you will get. And I comment on Allard who•owned this marvelous collection of eagle feathers and was told a few years ago that his feathers were worth nothing. He could look at them, but he couldn't do anything with them because he can't sell them. Well, instantly his inventory went from a hundred of thousands of dollars worth down to zero and the Supreme Court said that's too bad because those are not future... those are not present benefits that's something you would have earned in the future. It looks very much like stock ownership in ANCSA.

where the Menominee tribe individually held stock in a state-chartered and state-organized corporation and that was the -- the land was taken out of that status and put back into trust status.

no judicial determination of that. There was a lower court case that was started and then dropped for various reasons. But even more than that is the so called plenary Power of Congress, which has....

MR. R. JOHNSON: Well, I -- my

Secondly, if you look at the Menominee termination

(NOVEMBER 15, 1984)(OVERLAP TAPE, SIDE B)MR. R. JOHNSON: There has been

(NOVEMBER 15, 1984) (TAPE 7, SIDE A)

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MR. R. JOHNSON: ...beendemonstrated so many times and so powerfully in Indian affairs; and whether for right, for justice, for justice, or whatever, that power of Congress if very, very strong, and I think would be a sufficient basis if Congress decided to changes it's mind on the grounds that this is for the benefit of the Natives. It may be right, or it may be wrong, but the Supreme Court has said we won't look behind Congress' statement that this is for the benefit of the Natives, and if that's true, why then Congress could change the rules of the game, especially with regard to something that hasn't yet come to fruition. It will come to. fruition in 1991 or sometime, and is still speculative, and can do so without violating the Constitution.

That doesn't answer the question of political advisability, and I think there is a lot at issue about that, and I don't think Congress is going to act on the basis of just what -- because it's constitutional. They are going to listen to Elizabeth Johnston and Roland Shanks and Glen Fredericks and a lot of these people about what is -- what's the intelligent thing to do.

But I think as far as constitutional power...let me add another thing. There is going to be somebody who's going to sue anyway. I don't think you can go around the world deciding you are going to try and not have lawsuit, because you are going to be sued. But I think that Congress is going to have to figure out the odds on it, and go ahead and do what seems to be the just and right thing to do.

MR. BERGER: Elizabeth, then Bartand then Claude.

MS. E. JOHNSTON: I thinkcertainly the different perspectives on this issue have been laid out, and I won't ...go back and, I hope, reiterate anything I've said before. I merely wanted to add slightly to what Roland said, which is, and again I recognize this as a policy



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perspective, not a legal one. I am somewhat concerned also about going into Congress and saying that Congress has the power to do anything it wants. Again, Professor Johnson's memory on this is even better than mine, but my memory is that Congress has not always acted benevolent, but in an ambivalent manner toward Native populations, and has sometimes changed around things that have meant that the Native population got the short end of the stick and that some other group tended to benefit. I tend to think that the pressures on wishing to reach certain lands and certain assets in the State of Alaska are going to increase, not decrease. And, therefore, that the motivations for a well financed effort will increase, and even pressures on the political institutions will increase to do these things. And I would prefer not to be, perhaps in the future, in a posture of having established a principal that Congress can take and change corporate assets and move them into different kinds of status, trust or otherwise. And I would rather not be in a position of having argued that individual shareholders do not have vested rights. Because, I think that pathway leads me to dig problems for the shareholders who I am supposed to be trying to protect and the corporation which I am supposed to be trying to represent. I tend to find more protection, in the long run, in vested rights and would rather take care of them, and pay deference to them than I would create the other problem later, which I believe Roland gave a very nice concrete example of.

MR. GARBER: I guess I speak morein this situation (indiscernible) rather than as an attorney. I can put that away, because being a Native may get stuck in a position of having to make that policy decision of what to do about the dissenters. And, I find some support in that it is a historically, a political decision, and that the same kinds of things faced Congress and the federal executive before, Ralph, as you know, with the termination of allotment policy in the thirties when lots of individual Natives down in the States had



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their own little blocks of land, and Congress had the choice and the administration had the choice, in trying to draft up the Indian Reorganization Act.

When they tried taking all of .those lands and putting them back together again, and making them communal holdings instead of individual, they got all kinds of static from Natives. Both kinds, well acculturated ones who wanted to keep the property because they wanted to subdivide it, and surprisingly, they also had the static from the traditional ones who thought that they had held this land for fifty or sixty years for the tribe and they weren't going to have the federal government, whom they didn't trust, suddenly tell them that they were going to take the land back, and won't protect you and kinda said..--rwell they shook their heads and said well -- whoom. So there was static on both sides. The point is that it was a political decision, and even though there may have been a court case afterward, in that instance the administration opted to make the choice of the Native to give his property over a voluntary one, and they didn't force them to. You know you may come out with any number of alternatives.

I have one other... I've always... I '.ve been kind of concerned about dissenter's rights myself, and I would like to preserve them, or at least, try to find a way to preserve them for another reason. And, that is that we have to...and this takes into in part, you know, something of a traditional philosophy also. That Natives resolve their disputes for... to remain harmonious, to be able to continue on afterward. What happens when you do have a large percentage of your people upset, whether they happen to be the kind who want to have private property rights or, perhaps in an individual instance, you've got a substantial minority of more traditional folk? It doesn't matter, you're going to have...you're going to have a bunch of people who are upset one way or the other. And, it's going to be difficult for whatever entity that you have afterward to

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continue, and so that's another concern in the political decision. You have to understand how is it that...that the most of you are...whoever is going to able to continue on and still be able to live with one another, and to accomplish whatever purpose it is that you decide you want to accomplish. I think that is one of the main reasons to try to really center on dissenter's rights, and find some satisfactory way to appease them, whether it's the full amount of dissenter's rights that we have right now, or perhaps a different kind of right that we replace. Maybe there is something else that we can give to someone other than what's currently available, I don't know.

M R .• DEMENTIEFF: I want to backup a little bit, but I think you made some good points in that I wouldn't want the group to loose that in backing up. I would like to ask a question. AS a commoner and not a lawyer, it's hard to follow without intense concentration the discussion that you are having. It's very very interesting, however.

In backing up, I would like to ask this of Dan, as an outsider coming up fresh to Alaska as green in the fall of the year. You mentioned the fact that somebody is going to eventually go to the courts and sue somebody as to the validity of the corporation as the appropriate vehicle. In your opinion, could you -- could you give us an idea who that person might be, a corporation, an individual or what?

MR. FESSLER: It could indeed bean individual who has stock. -- in a regional or village corporation who wishes to dispose of the stock, and takes the position that they do not like and regard as fundamentally unfair a political decision reached by Congress that they can't [sue]. And, then they'd go and say, "Well, isn't this stock, which I got in 1971, which I had been led to believe I could dispose of in 1991, a personal asset, isn't that a personal asset?" At some point it is going to occur to say, "Well, to someone, perhaps that individual, why did I have to have the fruits of the Native



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Claims Settlement Act devolve upon me in this bizarre manner, stock in a corporation? It had never happened before, it isn't what I asked for." Perhaps I -- I overspoke. What I'm saying is that -- that eventually, you will press the corporation which... This whole discussion that I've been listening to this morning and now this afternoon, is predicated on trying to use the corporation to accomplish things that corporations were never asked to accomplish before. I mean, they've just never been asked to be vehicles to try and do what we are asking of them as institutions; and now we are trying to say, "Well, should we modify the institution, and will there be individuals who will claim that they are being personally disadvantaged through thesemodifications?" And that was what I was trying to say.that --that there were people who will raise that broader issue.

But again, I hesitate...I wouldn't want to let anybody walk out of this room and say, "Well, I listened to two or three or four lawyers." When we come to discussing the potential application of federal constitution...I'm simply not a constitutional lawyers, so I can only ask questions and expose ignorance. I don't want to be seen as the source of another legal opinion, for I would quickly deny that I would give anybody legal advice with regard to the constitution.

MR. BERGER: Well, I think it wasa misunderstanding. You said someone would come along and challenge the corporations as the vehicle. You'll...but you're really saying someone would come along and challenge the power of Congress to continue to use the corporations as a vehicle, but to... but denying the promise of alienations of shares had been there from the beginning.

MR. FESSLER: There is an odd bitof saying that it is a congressional command that there shall be created corporations. But, they shall be created under the laws of the State of Alaska... alright. Now, Alaska's positive substantive law recognizes dissenter's rights in the two areas



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that I said, and they are not optional, they are mandatory. And, it took an amendment to the Native Claims Settlement Act to say that if there were organic changes involving mergers or consolidations in which both of the participants were Native ANCSA corporating, there would be no dissenter's rights.Implicit in that might well be the recognition that is the ANCSA corporation would attempt at some point in the future to merge with a non-ANCSA entity, there would have to be dissenter's rights, else why would Congress have come along and nullified it? Congress committed the corporations to live under the Alaska's corporation law; to what extend can Congress now come around and keep interfering with Alaska's corporation law?

MR. BERGER: I had GlennFredericks down and then Bart, I think.

MR. GARBER: I just have onelimited comment, and that is that Congress reserved that right in the act, where is said that if there are any state law...any laws...state laws or federal laws that are in conflict, that the ANCSA will prevail. So...

MR. FESSLER: There is noquestions, but that was as of 1971.

MR. GARBER: That's not clear,and because we have amendments in ANCSA that became a body of the Act, so that clause may continue. I mean -- certainly, it's a restatement of the supremacy clause, perhaps.

envisioning the State of Alaska as the party who will come along. I am saying that individuals will come- along and they'll say, "Yes, I am a Native and yes, I am a member of this corporation and, yes, I am also a citizen of the United States." And...and the person I would fear most, and the person whom Professor Johnson thinks is not posing a substantial threat here, is the individual who comes along and says, "I am a citizen of the United States and as such, Congress has no right to take away my

MR. FESSLER: I am not



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properties save by the due process of law." The main area where Congress would like to do at the same point it will be told it can't do it. It could be a debt holder, sure.

MR. FREDERICKS: I have aquestion.

Is there any other... entities in the State of Alaska, like co-ops; what authority do they have? Co-ops, non-profits and so forth? You are dealing with...what... do they have dissenter's rights, do they...? You know, I'm very touchy about dissenter's rights. Nobody should tell me that I can't sell stock, but I have a different theory about it. I'd like...because the Native people continuously tell us to hold the land at all costs, so that...we are trying to weigh both of them, you know. And, what I'm getting at, is there are other entities in the State law that we could use other than corporations?

MR. FESSLER: Under Title 10,your options would be you could form non-profit corporations and they have a slightly different substantive provision.

MR. BERGER: Well, excuse methen, Dan. I wonder, Glenn, if we could just move on to the next two resolutions where this comes up full blown, if you don't mind, because we are at them now. I just wanted to ask one last questions before we move on to those, because I think that those next two resolutions raise this business of co-ops and non-profits and IRA's. You say that Congress chose this bizarre method of converting the Native estate and land in Alaska into shares that were held by those Native people then alive. And, the estate that had passed from generation to generation was suddenly stopped, and was conferred on those then alive, and they then acquired the right to pass it on by will even before 1991 and thereafter by selling and so forth. But they didn't pay for this; it was, in a sense, one hesitates to use this expression about any lawmaking body, but it was, in a sense, an arbitrary choice on the part of Congress to say, "You will be the



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beneficiaries of these centuries of Native title." They didn't pay for it...is it arguable; is this another way of looking at it? I don't mean arguable in the sense you are trying to persuade somebody of it right now, but is it possible to look at it in this way; this was an experiment by Congress? A new approach to Native affairs? And it is new; Monroe Price isn'-t here to claim that it's been done before. It is new, it's unique, it's an experiment; it has a twenty year life, and then they say, "Well, we are not very happy about it all, so we are going to treat all the shareholders who never had to put up a nickel as trustees for all the Native people, generations to ■ come. And we are going to do this or this, and we are going to deny the dissenter rights." Is that, even for the sake of argument, is that a plausible way of looking at it? I know this takes us very far from conventional corporate law, but...

which my opinion is being offered for nothing at its market value. I think it is a plausible way to look at it. I mean, one of the things I remember when I was given the opportunity to read ANCSA for the first time about six years ago, that I read and was struck by it, and I haven't heard it mentioned here today. And that is, if I'm not mistaken, there is a provision in the original bill which said that by setting up these corporations Congress did not intend to create any permanent racially or ethnically defined institutions. Now that bothers me. Given the obvious desire that we have to preserve that we have to preserve the land and the culture, and I...my God, that is a racially and ethnically, an historically defined institution. That provision was put in there, I suspect, because the ANCSA Act, like most pieces of legislation, is a jumble of compromises with clauses being put in to get certain votes, and other people saying, "I wouldn't vote for something-unless you put this in." And so, the thing speaks in many directions. But, that provision does worry me, and I would worry about that as well. I mean, if the

MR. FESSLER: It is an area in



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corporate purpose is later undefined as in having no alienability, as an attempt to make sure that no one other than those who could qualify can be possessed of stock...would there ever be a problem of or an embarrassment by the presence of that provision in the original ANCSA bill?

MR. R. JOHNSON: Well, one thingthat -- just a quick answer to something, the question of whether the Natives paid for the stock. They paid for it by giving up the claims they had to the entire State of Alaska, so there was clearly consideration involved in that. I think that was not an' issue then. But, the other thing is that if you look especially at the village corporations, they are not in any sense like any other corporation. You've made this point a couple of times,Dan, specifically, and in fact, the more you look at them, the more you realize that they look like certain aspects of governments. In that they don't represent a commercial enterprise going out and doing something, they represent a way of allocating an expression of a termination policy, but a way of allocating certain rights in Land to a specific group of people that is racially oriented, and was one way of instead of doing that to allocating this land to a government which is a government that governs both Natives and non-Natives. It is said we want Natives only to participate in this, and so they gave that corporate shareholder status only to the Natives in the village corporations. As I understand it, you look around the State now, and you look at those Native village corporations -- not the regional --the Native village corporations, they are essentially either moribund or operating more as governments of partially as governments. They, only a few of them, a very small percentage are now...ten, twenty percent are actually operating somewhere else as a business. Well, that why I say when I come back to the question of the plenary power of Congress...when somebody responds, and says, "But this is a corporate set-up, and all that." It wasn't really, if you look through the facade,



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through the words there, you see that what was being done was the allocation of land that is really land that these people lived on traditionally, are going to live on, and it is not a corporate form, except in some legislator's imagination.

Now, there are some cases that that's not true, and I realize that Glenn Fredericks and some few others have made successes of village corporations. But, if you look at the overall picture, then you realize that this is still an exercise of Congress' guardian/ward relationship, however you want to call it -- trust relationship, they are somehow involved that Congress was trying to resolve in a sense the trust relationship, and did so in a way that wasn't very well thought out in many retrospects, and that's why the Commission is now worried about it.

MR. STRONG: I just wanted torespond a little bit to what Professor Fessler had said about Section 2(b), I think it was Section 2(b) of the Claims Settlement Act, about Congress not creating any new racial enclaves and things of that nature. If you look at the language of that section, I've looked at it, and it bothered me certainly when I first saw it, and as I through with my work over the years, it -- I kept looking at it again. And, finally came to realize that particular is of absolutely no effect, and the reason why I say that is it says, "Congress is not by this Act creating..." and the operative 'creating'... any new racial enclaves." The Native governments were here before the Act, they continued after it. To me, what is was saying is that these corporations -- I think what they were trying today is that they weren't creating a reservation system, and I think that was some of the discussion that was going on certainly during the efforts to have the Claims Settlement Act come about. In my conversation with several of the Native leaders, subsequent to the passage, when I asked them why didn't we look at Native governments, why didn't we talk about Native governments at the time, and some of



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them has said, we did take a look at it, and we rejected it. And I think that was the reason why Section 2(b) was put into the Act in the first place.

But, I mean if you look at the operative words in the -- the key words in that is -- was -- of course, is "creating", and I think David and Professor Johnson would be willing to say that they're... the Native governments up here were not created by that Act, nor were they destroyed by the Act.

MR. CASE: Sure, one thing thatis intriguing... I mean, I think its important to look at the law in terms of the history of the law and of the decisions of the court. In 1973, the Supreme Court, for the first time in two hundred year, explicated the nature and the basis of the1 / discrimination for and against Natives. It's discriminatory and it cuts both ways, but of course, the Supreme Court theory and now is the law, is that the discrimination that affects Natives from the federal government side is not racial discrimination. It's discrimination based on a separate political status that is -- has been defined under the U.S. Constitutional and through the decisions of the Supreme Court. And that may sound like hair splitting, and perhaps it is, but the distinction has been used ever since to uphold federal legislation that affects Natives for Indian preference of which the -- this case rose, housing in Alaska. Preferential contracting for Native organizations in Alaska. The rule book is-now always become, it's not a racial discrimination, it's a political discrimination based on the status of Native people as a separate people politically and historically. Again, it may be a legal fiction -- lega.1 figment, but it also appears to be the law. So, I kind of agree with Tony that this language in Section 2(b) doesn't seem to mean a whole lot, given the development of the law after the Claims Act.

MR. BERGER: Well, maybe we couldmove on to these last two resolutions. Glenn and Marlene...Marlene...Marlene, could you just discuss those for us.



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MS. M. JOHNSON: Thank you.84-07 speaks to the transfer of lands and the

protection of lands, either in the Land Bank, but they would automatically be in the protection of the ANILCA Land Bank for all lands, unless you chose to take them out. And, developed lands would also be in the land bank but would not receive tax protection as undeveloped lands would.

That these land protections would be automatic, and to get away from the bureaucracy that you have to go through now to get land put into the Land Bank. It also would allow the transfer of lands to other Native organizations or entities, whatever that entity may be.

MR. DEMENTIEFF: Can I — I don'tunderstand this resolution exactly as such. If I understood you correctly, you said that they would automatically go into the Land Bank. According to the way I read it, it says in the resolution that they are deemed deposited. "Deemed" meaning they area under the same protections as a Land Bank but they don't necessarily have to be in there. Is that correct?

MS. M. JOHNSON: I think what weare saying when we put in the "deemed" in the Land Bank -- that means that they were automatically in the Land Bank, period. Unless you took them out they were deemed there. And somebody that's an attorney can explain it.

MR. BERGER: Well, I've been justlooking at this. It says at the bottom of the page, and the resolution would do three things. It would make the Land Bank protections automatic, and I think Claude's right. If all the land is deemed to be in there and then you cut the protection and you take it out to eliminate the bureaucratic paper work and so on, it would apply the protections to ANCSA corporation lands, and it would allow a corporation to transfer its lands to another Native organization such as a non-profit or an IRA without losing the protections. So the idea seems to be that all Native



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corporate land is deemed to be deposited in the Land Bank, even if it's transferred to a non-profit or an IRA in order to immunize it from corporate take-over or taxation or both. The Land Bank protections to with it. Now that seems to what they had in mind here, and the next resolution -- these are, in a way, perhaps back to front, but the next one -- perhaps Elizabeth, not Elizabeth, Marlene, you might just tell us what that one's about, and we can consider them together.

MS. M. JOHNSON: This is commonlycalled a NANA resolution. This allows the transfer of all the assets to another organization, whatever that organization may be, and the shareholders would be [in] membership with a non-transferable membership and a life-time membership. In a way, we are talking in simple terms to explain just what it would be. It would be just like a tribe. You're a tribal member until you die, you can't will your tribe... tribal membership to someone else after you are dead.

MR. BERGER: So, you have oneresolution, Number 8, that says a corporation could transfer all of its assets including land to another entity that would resemble a tribe in many respects... and that's Number 8. And -Number 7 focuses on the Land Bank and says that all corporate land is deemed to be in the Land Bank and then if they transfer it to some entity, such as NANA has in mind -- or to use the language at the top of the page here, "a non-profit or an IRA", they don't lose the protection of the Land Bank. So, I think in the unlikely event that I've fairly summarized these, maybe we can consider them together. David...

MR. CASE: I can...I would liketo follow .up on what Claude said. I guess I want to understand what your concern would be as to the difference between the lands having the restrictions or protections... I made a slip, but revealing one. The protections of the Land Bank without actually being deposited in the Land Bank, what's the difference?



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MR. DEMENTIEFF: I'm not sure. Ithink most of the people in the villages don't really understand the Land Bank. Everybody talks about it; I wish somebody from Gana-a'yoo was here. Because they... their trying to put all their land into the Land Bank, and having considerable problems with it, and considerable expenses. So, it's a big unknown as far as village people are concerned.

what kind of problems and expenses? I mean, what kind of a source are they experimenting?

don't. That's why I wish somebody was here. I would assume, legal expenses. They would get a lot of free legal advice here.

State, I've heard these same kinds of objections, and it would probably be useful to have some idea of what the problems are with the Land Bank.

hearing in Galena, and Pat Sweetsir who is the Vice- president for the lands of Gana-a'yoo spent two hours explaining all that he had gone through trying to get land into the Land Bank, and this was last July. And at that point, because they were seriously trying to get land into the Land Bank, they confronted the federal government with the necessity of actually developing a policy in relation to the Land Bank, and the negotiations, I think, had been cut off while the federal government regrouped the Department of the Interior. And decided, well, what is the Land Bank? And we've got to write our regulations and, you know, all this sort of stuff. I think that's what happened. I don't know where the legal expenses come in, but the bureaucratic side of it is a little sticky. Roland and then Glen.

trying to follow what's happening with Gana-a'yoo, because we have an agreement that as soon as we get lands we have to put

MR. CASE: Do you happen to know

MR. DEMENTIEFF: No, I sure

MR. CASE: Well, around the

MR. BERGER: Well, we had a

MR. SHANKS: Well, I've been



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them in the Land Bank, and so we are curious to know as to what we are going to have to go through. The problems with Gana-a'yoo, and the problems that they've come up against have been, first of all, the biggest problem they have is that they were the first people to do it. And it is never easy to be first. Everybody seems to agree, including the Interior Department, that to get the three basic protections -- which are the protections from taxation, from adverse possessions, and from judgment -- essentially all you have to do is to deliver upon the Secretary a letter saying that you wish your lands, and outlining the lands to be included in the Land Bank, and you can probably gain those three basic protections. The problem comes in when you attempt to negotiate an agreement that goes beyond those three basic protections, which is basically what Gana-a'yoo has tried to do.

They've essentially read the rest of the provision that talks about cooperative management, the ability of the federal government to enforce trespass and maybe carry out other types of management activities upon their lands, including permitting granting rights of ways and those types of things, and they've tried to set up some kind of system whereby the corporation will be able to develop basic policies, but the federal government will essentially enforce them. And they have run into... basically, they've run into the Reagan budget cutting process. The federal organizations are not interested in taking on added management responsibilities at this time which may translate into spending money. So, they've run into some real heavy problems that way. Like I say -- and it's as Justice Berger brought out -- the Interior Department did drop back and try and write some regulations. . Part of the problem was that Gana-a'yoo tried to go into the Land Bank, and there wasn't any regulations -- there was no guideline on how to do it. In fact, the Interior committee has still refused to come out with regulations. They only have guidelines which rather soundly sent

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back when they did come out. They were not...they didn't facilitate people entering into Land Bank agreements. In fact, they made it almost impossible. And they took away every advantage that there might be accepted as a great protection.So, right now the Land Bank is a very amorphous kind of thing. Nobody is sure what it is, nobody is sure how you gonna get in, and the only thing that you can probably bank on are those three basic protections, and nothing much past that. And, while those three basic protections are real nice, they are not the only protections that land needs in order to protect it as an asset.

MR. CASE: Well, then isn't thethrust of the resolution to automatically afford land those three basic protections and nothing more?

MR. SHANKS: That's the way Tread it. In fact, is...

MR. CASE: ...what you could getnow they are writing a letter to the Secretary.

MR. SHANKS: Right, and in factis in ANILCA another part of the Land Bank provision essentially when land is conveyed to a corporations that is automatically covered by Land Bank provisions for three years.

MR. CASE: So essentially, whatyou are talking about is sending a letter to the Secretary telling him you want him to continue those protections. And Gana-a'yoo also brought up and developed an interesting question that nobody yet has found the answer to. And, that is if there is a gap between the end of another Land Bank agreement, is adverse possession that starts during that window, can it continue onto title or whether it is terminated by going back into the Land Bank? And, that was one of the reasons why they were most interested in timing, was that they did not want a window between the end of the three year period and the initiation of the ongoing Land Bank agreement.



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MR. DEMENTIEFF: I'm not sure ifthe attorneys can answer, or Roland, or... this question.Subject to the regulations of ANILCA and the intent of the Land Bank, would the corporations in transferring their land to a Land Bank. Even though it's not a liquidation, would that be subject to the two-thirds requirement of the state statute and the disposition of the major asset extraordinary circumstance?

MR. FESSLER: I don't think so,because the provision that has always been key is whether or not the corporation was permanently alienating its interest, and that would come under the provision of sale of all or substantially all the assets other than the usual and regular course. The board is given power to pledge or mortgage assets without the necessity of any form of shareholder approval, and so I would assume that a deposit into the Land Bank would be far more analogous to that than would be the case of treating that as a sale of all or substantially all the assets, so that it wouldn't appear to be an organic change under existing Alaska law. But, again, it would be very useful if this were to be enacted by Congress, for Congress to specifically address the Alaska corporations code and declare that this is not intended to be a sale of all or substantially all owned now.- When you get down to the question of [84]-08...well, we are going to transfer the assets to some other entity, and that is -- it looks to me as if it's going to be a permanent transfer of assets, then I think you've got a -- you have come squarely up against the Alaska corporation statute. Because that is quintessentially the type of transaction which dissenter's rights would otherwise to recognized, and you'd have to have the whole formal compliance that the board has to propose it, has to have a special lay notice to shareholders meeting. Shareholders, by the requisite majority, have to vote if there are classes of shares they ballot by class, etc., so that the -- the [84]-07 transaction probably



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is not an organic change within the meaning of the existing Alaska statute; they though eight transactions would be.

asked is because in reading the resolution without the clear understanding what the Land Bank is, it sends up all kinds of red lights. And I know that we had to go to the shareholders and ask them to transfer the land...it's going to be impossible... into the Land Bank, if that was, indeed, the case that we had to follow this state statute, the two-thirds majority. But, apparently not, because it's not a real liquidation. It's just a transfer, temporary transfer. But, automatic red lights pop up when you look at the going into Land Bank without a full understanding.

with the corporation taking the lands out of the Land Bank once they are there at any point. The only thing that happens then is that you pay back taxes if they're due, and in most situations, unless you've got a new city, or the state has started requiring taxes, you are not even going to have that. So that there is no encumbrance. You know that there is nothing that -- there is no cost to putting in it, other than just the attorney's fees or what-not it takes to draw up the documents. So, long as you escape the designation of a sale, or transfer, like Professor Fessler said, the only standard you've got to meet, if it's even a standard at all, is business judgment. And the courts usually aren't gonna touch anything there, and it sounds like you got all kinds of arguments to your favor to avoid taxes, you know, and adverse possession and what-not.

speak to being in favor of the idea of the lands being deemed deposited in the Land Bank even though, if you like, "just" means the three basic protections.

Again, going to the village corporation level -- although theoretically, it only requires a letter to the

MR. DEMENTIEFF: The reason I

MR. GARBER: There is no problem

MS. E. JOHNSTON: I just want to



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Secretary of Interior, some of the village corporations in our region, for them to get down and describe appropriately the land etc., etc., is not really going to happen; and in order to have the land protected, which is a desirable goal, I think it is desirable to have it deemed deposited. Remember, too, when the Land Bank was first passed, all were deemed deposited and there is this, what, three-year period sort of running. In the BristolBay region, we got IC fairly quickly, we received interimconveyance fairly quickly. And, so for segments of the land, that automatic three-year period is running, and I think it would be highly desirable to not have gaps and to be able to have in particular, the village corporations lands protected. I think that those who wish to then pull out, of course, can.

The only other thing I want to say on the Land Bank was the hope that we could add one more concept in, and this was really a concept brought to my attention by Don Mitchell who is one of the attorneys working for the Federation. The whole freedom to be able to pull or remove the lands from the Land Bank is highly desirable as long as that corporation is in Native control. And, of course, you can -- you don't have to pull alllands out, you could pull a portion out, and that would allow thecorporation the flexibility to do what they needed as time passes. But what became of concern was if you get a corporation in a posture of bankruptcy, so that suddenly you're under the bankruptcy rules where they talk about sort of the trustee taking over the assets of the corporation in order to deal with the creditor situation, whether or not the trustee could march in, okay, and take the lands out of the Land Bank and then make them vulnerable to this dealing with his bankruptcy solution, which is basically what he seems to be concerned about. Appropriately being a trustee in bankruptcy. And I think it would be good if we could sort of add to the idea of the Land Bank, or be it something that would be put in bankruptcy law or something that would be put in ANCSA itself to make quite clear that the trustee



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in bankruptcy would not have the power to take the lands out of the Land Bank to deal with creditors because, of course, that would be a complete negation of the whole idea of protection from unsecured debts. So, that's just an additional idea, and as I say, it was Don Mitchell that first brought that gap to my attention and I think it's an important protection.

MR. BERGER: Could I go backto...let's call it "the Glenn Fredericks position." Let's suppose you want to achieve the protection of subsistence lands and you put them...they are deemed to be in the Land Bank, you wrote a letter to the Secretary or whatever, so you got those lands in the Land Bank; they can't be taxed, but the corporation is taken over by outsiders. Then they acquire the land in the Land Bank, and they acquire the right to write to the Secretary and say we want out again. And you also have no protection against corporate failure. This is really to...if I may repeat on I think I said yesterday, 'to immunize corporate lands against taxation.'

MS. E. JOHNSTON: Yesterday, oneof the things you did list was how do we immunize the lands from corporate failure, and in my view, obviously you need a combination of things to do that. One thing standing alone won't do it, but perhaps the combination of the restricted stock together with this possible improvement suggested by Don Mitchell on the Land Bank would provide that protection even within the corporate format.

MR. BERGER: Well, pursuing thethought for a moment... Restricting sale of stock means that the Native corporation won't be taken over; putting the Native corporation land in the Land Bank means it's immunized from taxation as long as it's used for subsistence, or undeveloped, but if the corporation fails, then the creditors get the land in the Land Bank. Or is the thrust of this proposal that it never comes out? Could you explain that?



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MS. E. JOHNSTON: I don't thinkthe thrust of the AFN proposal is that it never could come out.I think you could because I think...my understanding was that they left with the board of directors the discretion to pull out. But what it left unanswered, just because of the way the Land Bank was drafted, and because as I understand how bankruptcy is drafted, that they didn't mesh very well, and you have that hole in the legislation where it's possible to argue that as the creditors move in and their interests are represented by the trustee in bankruptcy, that he could then have the discretion -- which he has instead, then of the board of directors -- would have the discretion to take the land out, and use it to satisfy debts which, of course, cuts against the whole intention.

MR. BERGER: Right now, if youdid happen to get some land into the Land Bank -- leave this AFN resolution out of it -- if you've got land in the Land Bank now, the ANILCA Land Bank, it would be immune from taxation while it's in the Land Bank, but when the ten years and... but if your corporation failed...

(NOVEMBER 15, 1984)(OVERLAP TAPE, SIDE B)MR. BERGER:- (Continued) and

leaving Mitchell's gap...(NOVEMBER 15, 1984)(TAPE 7, SIDE B)MR. BERGER: (Continued) out of

it... Let's assume there is no gap, as when the ten years expires, then the creditor can take the land, is that it?

MS. E. JOHNSTON: If I were onthe board of directors and I was approaching the ten year period,I would make sure nothing expired. I would just slap the five years on top of it.

MR. BERGER: Well, under the lawsas it stands now, when you've slapped your five years on top, is



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that the end?MS. E. JOHNSTON: No, you can

keep going, it's... I'm saying it's a good rule, both Roland and Glenn who agree with me that the extension, although it's for a term, you can add terms.

MR. BERGER: Do you want to speakinto the mike, Roland Shanks?

MR. SHANKS: I said the realquestion would probably be whether there is a positive motion needed to maintain the land in the Land Bank, and if you'd already had a take-over or a bankruptcy situation or something like that, the corporation may be unable to make that positive move to keep it in the Land Bank.

MR. BERGER: You mean that ifyour corporation goes into bankruptcy, and the trustee in the bankruptcy is running the corporation, he isn't going to renew the Land Bank.

guess that.MR. SHANKS: Might be -- I would

MR. BERGER: It might be a breachof his duties to the creditors, one would think.

MR. SHANKS: There is also acouple of other problems that have come up in the context with the Land Bank. One is... and I think that his has pretty much been resolved, but the...early on, there appeared to be maybe a state's rights issue brewing with the federal government, essentially -- usurping taxing authority of the State of Alaska, and adverse possession, and some of these other things which the state has held very dear as being state issues. I think that's been turned back, I think the state has now seen that this is a good thing. But, it is a problem that could come up again in the future. There is a potential that there is going to be a state version of the Land Bank introduced in next year's legislature which will not only offer a state version, but will affirm the



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federal version to take care of any of those kind of problems.And one thing that just occurred to me while listening to this whole scenario that is -- could be almost the world's worst scenario -- and that would be that a corporation put their land in the Land Bank to protect it from being lost and in fact have a serious take-over bid brought against them, and because their land is in the Land Bank, and it can't be pledged or alienated, they have absolutely nothing to go to the bank with to try and get money to hold off and defend against the takeover. So they could essentially be tying their hands to defend themselves against to the take-over by trying to protect their own land.It's kind of a real desperate catch 22. Yeah, but you'd have to pay all the back taxes, and if you pulled it out in the...

MR. FREDERICKS: ... taxes you'dpay, as I understand it, is if you develop part of that Land Bank, that's correct.

MR. SHANKS: Well, yeah. But,nobody has done it yet. And, I'm not sure.

MR. BERGER: You are speakingwith great conviction and...

MR. FREDERICKS: ...what would Igive as a Native? For two hundred years, we've been fighting to keep -- get our land, and then we turn around and give it back to the federal government? You know?

then Gary Anders.MR BERGER: Rose Mary Maher and

MS. MAHER: I agree with Glenn.I have some old files. My father was the secretary of the Village Council, and back in 1959, and I read through the old files and one of the letter that he wrote said, "Dear Secretary of Interior; We, the Native people of Northway would like to keep our land that we.hunt and fish and -- for subsistence." And he drew a map around the area he wanted, and said we would like the federal government and the state government to stay out and we



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would like to prevent non-Native people from getting homesteads, and signed it and sent it off.

And, to me, that was the basic concept of the Alaska Native Land Claims was to keep the land for the people as they used it. And, it got all blown out of proportion, and I think I agree with Glenn that I don't like the Alaska Native Land Bank, and as a village corporation president, you know, I would be against this resolution, and I don't have a solution, but I do think that the reason for the Land Claims was to keep the land for the Native people and their uses. And, I think the best solution would be transfer it to the IRA's. And, I'd just...I've had bad experience with the Land Bank; I've tried to deal with them and I gave up. Gana-a'yoo got to them first, so I really didn't carry it any further, but I totally agree with Glenn.

MR. ANDERS: I'm confused. Itseems like we are talking about corporations as a homogeneous unit, when in fact there may be or may not be conflicts of interest between regional corporations that have subsurface title and village corporations that have surface title. With regard to

i the deposit of land in the Land Bank, who does that and who can withdraw it? It seems that you have developed mental issues regarding the use-rights of both surface and subsurface estates. And, I'm not sure if -- when a village corporation nominates lands for the Land Bank, whether or not that means that the regional corporations can't explore for oil and gas associated with that; you know, I think you have a real thorny issue determining what's developed and what's not developed. It seems that, you know, there are so many problems here that have to be thought out that... you know, they ought to appreciate some clarification.

David Case.Mr. BERGER: Thank you Gary.

MR. CASE: I don't have much



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clarification as to what's developed and non-developed. There is a new state statute that rather meticulously defines that. And Roland probably knows better what it means than I do; I've just read it, he lives with it, I suppose. But, it has the mark of having been thought through. And I'll leave it at that; maybe you want to elaborate on it.

MR. BERGER: Bart Garber.MR. GARBER: Why don't you go

ahead and try it first, Roland.MR. SHANKS: There is one

provision in ANCSA already that says at least for exploration purposes that won't be determined and deemed development of land. But, I mean, how far do you go in exploration before... "well, we are exploring because we drilled a well, but we only drilled one and that's still exploration, that was a test hole." I don't know. This is where you get into the definition of state law, and depending -- just because something has been thought on doesn't determine who thought about it, so you know that will determine the depth of it. As far as the surface/subsurface and who gets the deed on it... that's a new one for me. And if someone else could maybe bring in this -- maybe an application to see what is the scope of 14(f). About when the village allegedly has the right to determine when land will be developed, where then you've got regional corporations coming in telling us that there is this long term theory of common law rights to access subsurface minerals that comes in conflict with that, so maybe it's a time to determine, you know, the 14(f) question. What is the scope of that right? And when it has to do with Land Bank decisions, I don't know. That may be a position where a village may be able to negotiate to say that..."region, if you do develop, you will assume the tax liability that you gave us."And maybe there is a way to negotiate -it, so it's just not an either or question again. I'd like to avoid those.

MS. MAHER: On the 14(f) issue, I

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don 1 t know if you are aware that there was an effort made between the regional and the village corporations specifically to gravel, and it got into the 14(f), and things fell apart. We couldn't -- the villages and the regions couldn't communicate, they couldn't agree so we just dropped it. And, I think on the 14(f), if you have lots of money, then we can address the issue.

MR. SHANKS: I was on the boardof the village corporation; I'm really aware of that problem.But the subsurface -- the gravel issue had to do with ownership, and not the ability to get at it. So, we haven't gotten to the question of the ability to get at it. We have found out that we don't own -- all we own is a surface right, we apparently don't even own the grass we walk on, maybe that's surface. I don't know, maybe that's not surface and the region owns the roots.

MS. MAHER: One more comment onthat 14(f). When we were meeting with the regional corporations, we tried to tie the 14(f) in with the gravel, and that's where the negotiations went dead. The regional corporations weren't ready to address the issue, and I think it's probably going to be a legal battle before it's over with. And I have real problem because I'm on the board of directors of a regional corporations, and the president of a village corporation, so I kind of try to stay away from that issue.

MR. DEMENTIEFF: Just a littlecomment. I have to quote my father when I came down to the purchase by the village corporation of gravel from the region; he said he didn't want to buy it, he just wanted to rearrange it, that's all.

MR. SHANKS: Well, to get back toa little bit to the comment that was made just a couple of times ago about the state law that defines development. That was in fact developed and put forward by Cook Inlet Region a couple of years ago. While I was on staff over there, to deal...



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MR. BERGER: Sorry, what wasdeveloped?

MR. SHANKS: The amendmentdealing with "what is developed land?"

MR. BERGER: Oh yes, right,right!

MR. SHANKS: And basically, whatit says is that when land is put in a position and it'sessentially put on the market to be converted into money, thatthen it is developed; up until that point it's not. Even though the land may be divided into lots and there may be power running in front of it and a road by it, it still isn't developed until you actually put it on the market. And, that was to solve a problem that some regions and some villages have, and that they have gotten lands that, for one reason or another, was subdivided in the past by the state or by, you know, some other situationand through all sorts of courses of fate, have now come to aregion or a village. And also, some of the urban villages have problems in that there land lay adjacent to a highway... and again, it was not really through any activity of theirs or any kind of desire of theirs to develop the land as it lies next to a highway, and we felt that they should not be penalized and taxed because of that.

Kenai Borough was saying that the correction lots that BLM uses to correct... it's a surveying technique that they use to correct the number of acres within a township, and the lots that are created by water bodies... to use for 'acreage calculation, are in fact lots. They are subdivisions, and therefore, taxable as being developed. So this law was kind of aimed at heading that off. Anyhow, that's enough background on that, but basically, the state law deals with taxation of land, and while we have kind of shifted it over and used it as the definition under Land Bank, there is no direct tie in statute between the two.

We had a situation on the Kenai Peninsula where the



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The surface/subsurface issue is an issue that was discussed an awful lot. AFN had a work group on the Land Bank a couple of years ago, and we went through all sorts of scenarios and all sorts of "what ifs" and "what happens now" kind of runs. And, there was a lot of questions about that. Basically, the statute is silent to whether the surface owner can put theirs in separate from the subsurface owner, whether the subsurface owner can put his in separate from the surface owner, whether they have to joined or what.

And we just kind of assumed, I think, particularly the villages and some regions were anxious to assume, that since Congress and it's wisdom was silent on whether you had to be a surface or a subsurface owner that they didn't care, and since they didn't care, we figured we wouldn't care. But that is an issue that will, I'm sure, be a stumbling block to the use of Land Bank on down the road when you have a village that wants to put an area into the Land Bank, and you have village -- a region that wants to do some development in that area; it's going to be a difficult situation. And to speak just briefly of the 14(f) situation has that been brought up, I don't want to speak too long about it, because we are currently in litigation; and even though our regional attorney -- regional corporation's attorney is no longer here, there is pending litigation between Eklutna and Cook Inlet, which involves not only sand and gravel and who owns it, but also 14(f) and the extent of it. We agree with Claude's dad that we weren't selling it, we were just moving it; and our regional corporation disagreed with where we were moving it to, so hopefully, when this litigation comes down, we will have a better idea of what the rules are and what the whole situation is.

MR. BERGER: Tony Strong.MR. STRONG: Yes, I wanted to...

I thought the discussion would stay a little bit longer with this other issue of... with change of ownership of a substantial



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proportion of the assets of the corporation and...MR. BERGER: Well, Tony, I think

we have come to that, and can I just say a word and then I'll give you the floor.

possibilities that have been raised here, first of all by Glenn Fredericks that the land held by Native corporation is transferred to a cooperative or a non-profit corporation -- and Rose Marie Maher says, "or to an IRA." You have those possibilities and I... This NANA resolution seems to encompass those; perhaps I don't quite understand it. And so, it seems to me that the discussion arises out of that and we might, and I think this is what you are about to come to; what are the rights of the dissenting shareholders? And, the second thing that I want to come to and have people address is taking those three possibilities in turn, co-op, non-profit, IRA. What protection do you have against corporate failure, against corporate take-over and against taxation? And, so the floor is yours, but I think that's what we're doing now.

head "no" initially when you said dissenter's rights, but actually, it does involve dissenter's rights. The scenario I'll put up before the fine legal minds here. What do you do in a situation where, s a y we have a corporation -- a village corporation right now owning only the surface rights and the regional owning the subsurface rights? The village corporation, in trying to fend off failure or trying to get some assets to be able to invest in their operations, have pledged one hundred percent of their land. And their efforts failed; they are now on the verge of Chapter 11 or Chapter 7 Bankruptcy. That is a major transfer of assets, so to speak. They didn't need to get the shareholder's permission, as it was clearly stated earlier, they didn't need to get shareholder permission to obligate the land. But they went ahead -- I mean to transfer -- I mean they do need

I think that we should consider the two concrete

MR. STRONG: Well, I did shake my


Anchorage. Alaska 99501

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to get it for transferring the assets, they don't need it to get to obligate it to pledge it for... as collateral. Now we have a situation, using my scenario, now you have a situation where all of the land has been collateralized, the village corporation is on the verge of Chapter 11 or Chapter 7 Bankruptcy. And, how do you address the dissenter's rights, so to speak? Do the dissenters have any rights under that kind of circumstances, and who are the dissenters, right? How do you determine that first, then at the same time... Chapter... is there any kind of protection that could be afford to those... to the ownership of that land?

questionsMR. FESSLER: Those are critical

First off, we have to distinguish between two possible scenarios of Alaska's substantive law. That which is the current Alaska law is an Article 5, of the existing Alaska Corporation Code which we've had in place essentially since 1957; all right.

Should the legislature enact what was last year Senate Bill 246, let's first talk about the question of a mortgage. A mortgage is within the prerogative of the board of directors, and they have no need to go to shareholders if the mortgage lease exchange or pledge or other disposition of all or substantially all the property and assets of the corporation is made in the regular course of business. Now, it would depend therefore on what it was that the board was getting in exchange; you would indicate if they were trying to raise liquid cash for the purpose of developing assets. Boards normally take the position that if that is what they are attempting to do, they are within the area of pursuing the regular course of business, and that they have authority to do it, and that that type of thing is not an organic change. If a mortgage under the existing Alaska law is not in the regular course of business, then it would fall under Section 438, not Section 435, and it would have to shareholder authorization, because that would be treated as an organic



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change. If it was Section 435 transaction in which they have not gone to the shareholders, and there was no shareholder vote under Alaska law, there would be no dissenter's rights. Because the only way you can become a dissenter under Alaska law is to have, first of all, the board obliged to put the issue to the' shareholders, recognizing it as an organic- change, and you become a dissenter by going to that meeting in person or in proxy and voting "no" on the question. That's the first thing you have to do. If you don't vote, you can't become a dissenter. You had to vote "no". And thereafter, within thirty days, you must make a demand upon the corporation that it pay you the fair market value of your shares. If you don't make the demand within thirty'days, you forfeit what had been your rights. Now this is just going through the scenario of what is existing Alaska state law. Corporation is obliged to pay you that sum of money or make a counter offer and to negotiate with you. You have ninety days in which to conclude that negotiation. If it is successful, they pay you the sum of money you negotiate out. If not, the matter goes to court; the corporation is obliged to go to court and pay the legal expenses of commencing an action to determine the fair market value of the dissenter's rights. And the object is to bring all of the dissenter into that one judicial shoot-out, so that whatever is ascertained to be the value is the sum which is paid to every shareholder; just multiply the number of shares which he has. So, that's the scenario.

Is there any protection if the corporation is on thevery of failure in the scenario? None whatsoever, none. Allright. Although the statute does not indicate it, it is prettywell... I don't know of any deviation from this when the pointhas been put to courts and other jurisdictions, that the rightsof bonafide third party creditors always take precedence over therights of equitable owners. Whether those equitable owners hadin the interim dissented or not, and so we -- we can't look to ! ’ these areas of corporate law as a protection of the lands of the



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corporation against the specter of what will be the corporate obligation of creditors. Now, I can't speak to the Land Bank that you are discussing, whether it's good or bad. I don't know whether the Land Bank gives you some sort of strong-arm legal protection, but I can tell you that the basic concept of a sale of assets and the fact that there are, or not dissenter's rights is currently a matter of state law, and whether or not that's some sort of trump card... to say to the creditor, you're really not going to be able to get our corporate assets because we are paying them over to all of our dissenting shareholders. We would have had to have all the shareholders vote no, in which case you would never have authorized the transaction, in which case it would be an "ultra vires" transaction which is another -- I mean it's so -- it's so crazy to be talking about these basic human problems in Latin terms. I mean, it gives you some dimension of what it was when this idea making these corporate problem arose. One change that you ought to be aware of, should the legislature have passed HB343, Senate Bill 246, in the Alaska Legislature, there would have been more discretion to the board of directors.A mortgage of corporate assets would never have been treated. In other words, whether it was quoted in the usual course of business or not, in the usual course of business under the new Alaska corporations code pending in the old legislature, and it was not enacted last time, the mortgage would be a business decision for the board to make. You wouldn't have to go the shareholders so that there would be no possibility of dissenter's rights unless the articles of the corporation set a higher standard wherein dissenter's rights would trigger in. But again, even under the new ACC provisions, there would have been no enhanced margin of protection for the corporate assets against the plans of the bonafide creditors.

MR. STRONG: The next -- thefollow up of that is this hypothetical corporation who's in this dire straights, what can they do? I mean, they are stuck with



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having mortgaged all of their lands and they're in a position now of not having any money to pay their creditors, and they don't want to have to lose all their land. The shareholders don't want to lose the land. I mean it seems to me then that the only possible option they have is to merge. Find some big brother to merge with.

MR. FESSLER: The failingcorporation in that circumstance then becomes an object of a race of creditors. Those who hold the mortgage are protected because they have the prior right, they have a lien upon the mortgaged land. The unsecured creditors are going to take a bath under your scenario, they are not going to get anything at all.

The way you try and hold off the creditor who otherwise is going to foreclose on the mortgage is to convince them not to, and the way you normally convince them not it is just what you suggested. You go to some other entity and say, if this entity puts its assets on the line so that you can now look to that, we can either say that the consolidated or the merged corporation will be buyable, in which case you won't foreclose because we've solved the problem with insolvency; we're solvent once again.Or, we've got somebody to come along and act as a guarantor.But, I suppose at that point Rose Marie's village corporation would become very friendly with the regional corporation, and would be racing there saying, you know, would you like to help bail us out of a situation like this?

MR. STRONG: I have another,slightly a follow up. Is... and this might make a regional corporation a lot more friendly toward this village corporation, in its region is what happens if the regional corporation, this hypothetical village corporation, have an option of going to another regional corporation outside of its region and saying, I need help. And, I think somebody else, somebody who is more familiar with ANCSA would be able to... My thinking is that they can do that, but it just presents political problems.



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MR. GARBER: Tony, I think youcould ask anybody you wanted to, it depends on what you've got to sell. Your own region, like it has been alluded to -- may be interested in something because they have a subsurface estate that close to it. And so, you may be able to sell some right there if there is anything at all caught up in 14(f). But otherwise, you know, what interest does anyone else have in dealing with your problems?

MR. STRONG: I'm... you'realluding to saying that... the corporation which I've talked about -- a hypothetical corporation, which I've talked about, has any existence in any part of the state, and I don't claim that it does. I'm just stating that -- I'm talking about the stuff that was mentioned earlier -- what, about twenty thousand or two thousand eleven, you know, what can we do? What can a corporation faced with that circumstance do immediately, barring any kind of change? So, you know, I don't want to allude to any village corporation right now.

MR. ANDERS: Let me give you adifferent situation.

Let's suppose that a village corporation has some financial problems and there is a potential take-over or forced sale of a portion of land. The subsurface estates, I guess, are marketable or alienable to an outside interest, but the surface estate has been placed in some kind of trust, whether it's with an IRA or a cooperative or a Native association. I guess the question that really deals with the integrity of the land base is being set aside. On one hand, you seem to be talking as though once it's put in the hands of some protective entity, it's safe from forced development by an outside entity, whether it's a regional corporation or a non-Native business. And I get the impression that that might not be the case. Earlier on, Justice Berger, you mentioned the possibility of potential swaps of land between village corporations and regional corporations so that



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the village corporation might be able to acquire a land base that maintains both the subsurface and the surface estates. I'd like to hear some discussion about that.

MR. GARBER: I can only talkbecause I happen to be in a village corporation that might have some surface estate that might even be worth anything. And, even when you are in that situation, you've got to understand that the region has all of the subsurface below you anyway. And, unless there is something that they're real real interested in -- in keeping sole protection over one area, I really don't know that there is going to be much chance of us striking a bargain. But you know there is other situations of these other hypothetical villages, that the surface estate may' have an extraordinary value •that might be exchanged for, hopefully, on the part of the region, I guess -- subsurface estates that has no values; that's the only way I can see it.

MR. SHANKS: I think part of theproblem is that until we actually get shaken out what is subsurface and what is surface and how big 14(f) is and how little 14(f) might be, it is very difficult to think about how you structure something like that. Realistically, you know a worst-case scenario for the village 14(f) is just downtown. The villages may not have much interest in gaining surface rights; so there may not be a lot in it for them. Worst case scenario for the regions 14(f) is the entire village selection area, in which case there might be a lot of interest. There have been village and regional corporations who have actively talked about trading parts of the subsurface for surface and essentially creating two pieces of property that are separated now vertically, instead of horizontally. And my hunch is that once these problems of what is included in each estate are actually start to get settled out, that we will see some of that actively happen, because it is obviously one of the easier ways to get around the 7(i) problems and some other problems is to do that kind of thing.



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MR. BERGER: Could I come back tothe point that I thought that we had reached about thirty minutes ago? When we were about to consider resolution 84-08 and... could I ask... Well, it seemed to me that the issue raised was one that we should take up with these legal experts while they're here. That is, if Native corporation transfers its land to a non-profit or a co-op or an IRA, what advantages are gained thereby? I think we should discuss that, and I thought we should also consider the procedural -- the present procedural problems, if that's the right word, that stand in the way.

MR. FESSLER: This is... Usingyour three goals: protect from corporate failure, protect fromtake-over, and protect from property taxation with regard to the real estate held by the corporation, whether its surface or subsurface estates.

Non-profit corporations and cooperative corporative are corporations under the law of Alaska. Therefore, they have about them the attribute of limited liability. They have some very different features, however, that you are embracing the biggest distinction between a profit-seeking corporation which is what all of the ANCSA corporations that are through"regional level are -- and I understand there is dispute as to whether it's merely the vast majority or all of the villages corporations, and non-profit corporations which were an alternative extended under the Settlement Claims Act to village corporations that they could be non-profit if they wanted to. The basic idea there is the whole notion that you would gain some enhanced protection against alienation because you can, you have a greater ability to define the qualities and characters of who can be members of membership oriented, non-profit corporations. You have, however, a trade off for that, in that you are unable to make any form of direct distribution of the fruits of the enterprise to the members. Whereas, you can make direct distributions in the form of



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dividends in cash or in kind to shareholders in a profit-seeking corporation.

MR. BERGER: Excuse me, Dan,you're lumping what are called non-profit corporations and cooperatives together, there is no distinction?

MR. FESSLER: Oh no, I've noteven begun to speak of cooperative yet. Because they are deserving of yet another type of treatment. In so far as what the basic thing you would notice in your life if you suddenly took a corporation and transformed it into a non-profit corporation, all right? You would have a choice between what are called public benefit non-profits and mutual benefit non-profits, and it is clear that you would opt for what are called mutual benefit non-profits. •

A public benefit non-profit would in an outfit like the Community Chest that is intended for some charitable or eleemosynary purpose. Doesn't even have members, has a self perpetuating board of directors.

A mutual benefit non-profit is organized not for everybody in the society, but for a certain group of people and it is run, according to Mr. Bass, very much like a profit seeking corporation; and with that generalization, some mental reservations aside, I would generally concur. The biggest, biggest, distinction is you cannot make any type of distribution to the individual members so they can't look forward to ever receiving any kind of a dividend check if you opted to organize as a mutual benefit non-profit. Does it mean that you can't ever get any advantage out of being a member of a mutual benefit non-profit? No.

The theory is that the mutual benefit non-profit is providing a battery of services to you and its cost structure for providing those battery of services, since it doesn't have the element of having to pay dividends to beneficial owners, will be lower; and that is your basic economic benefit for affiliating


Anchorage. Alaska 99501 ......................(907)274-4833

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with a mutual benefit non-profit corporation. Are you immunized from corporate failures? No. You have no greater immunization from corporate failure than a profit seeking venture would have. Again, bona-fide third party creditors will always have the prior claim on corporate assets over member's claims. But you can define members in such a way that makes it harder for there to be a take-over.

Although, I would point out that even for profit seeking corporations under the corporation law that was pending in the last legislature, a corporation is competent by its articles to define the attributes and qualities and qualifications for shareholders so you can have lots of protection there, and clearly do that in a mutual benefit non-profit. Are the interests in a mutual benefit non-profit alienable? There is a greater tendency to respect the right to restrict alienation of memberships and mutual benefit non-profits. Not terribly edifying, but a very common group, our snobby country clubs that form themselves as mutual benefit nonprofits, and they are very very interested in who's going to be there, whether they will wear the right clothes, etc.

So, there are certain advantages, and those advantages sound most likely in protection from take-over and a greater opportunity to select who will be the members. Are you protecting your property from taxation? Not as a mutual benefit non-profit corporations. They pay taxes just like everybody else. Public benefit non-profits generally are exempt from taxation but mutual benefit non-profits never are. So, a country club pays taxes, it pays taxes on its gross income, it pays taxes upon it real estate, etc. So that's the essential choice to be made with non-profit entities.

Now, cooperatives. Alaska has one of the most skeletal cooperative statutes on the face of the earth. All right. I mean you'd get a better reading of the weather by walking into a cave and just sitting there for six months and guessing, than you



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are going to get a reading of your future by chartering your future under the skeletal provisions of Alaska's cooperative corporation statute. You can count both of the major judicial decisions on your nostrils in terms of figuring out whether the court has gone along and sort of filled in the gaps; it hasn't. So, we don't know much about cooperatives, but I can give you a sort of a of clue as to what they look like.

A cooperative is the most insulated from take-over of any entity, because there is no stock. And the membership in a cooperative, if it does choose to have stock, the stock is virtually meaningless. It carries with it no voting rights. You can restrict the membership in cooperatives, and cooperatives are very, very useful because in dealing with the members of the cooperative, cooperatives have been used to ‘discipline various aspects of the economy. So, if you belong to a fishing cooperative, and you get in trouble with that cooperative, you're in real trouble, because they have rights to your catch that are defined by contracts. And there are provisions in state law that say no matter how unreasonable, no matter how one sided those contracts, the member is bound. So cooperatives have been used in other states and to a limited extend in Alaska.

Primarily to make it possible for certain individuals in certain areas of agricultural endeavor to organize themselves as either production or marketing co-ops., Alaska's statute, as I say, compared to those of other states is in desperate need of serious attention. The Alaska Code Revision Commission, at the present time, is undertaking a look at the Alaska cooperative statute, and if the AFN is interested in that area, I would urge you to engage that body in dialogue, because they are right now looking at it. A co-op gives you no protection from failure. A cooperative can belly up just as dead as can a mutual benefit non-profit or a profit seeking corporation has considerable protection from take-over. Has no exemption from taxation, alright. So, there is no entity out there that I'm aware of,


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unless we can get one created that is Cinderella's carriage, that you can just pop into and be assuredthat you will be whisked away to a lovely evening. They can turn into a pumpkin on you if the business turns out to come a cropper, in which case you can't reverse the process, at least unknown to me how it's done.

explore a little more about this cooperative.I don't know if you were here when I explained... now

I'm coming from a Native... we talk here... everybody's got an input which is good. From a Native standpoint of saving the land... My idea was, can a corporation that now exists, my company, my corporation take that land and put it into another like a cooperative to protect it? Can I do that legally, under state statutes, as it exists now?

ith the exception that I would suggest to you that taking the land from your village corporation and conveying it to a cooperative corporation would be treated under existing Alaska law as an organic change. So, you would have to have the consent of your shareholders. And once that it was that cooperative, it would be insulated in the sense that however you define the cooperative membership, you could keep that cooperatives membership comprised of Natives and exclude non-Natives. If you ever were so foolish as to get that cooperative to join in guaranteeing any loans made to the corporation, the minute you take the assets that are in the cooperative and have the cooperative become a guaranteed party to the transaction, there is no longer any safe harbor for those assets; I mean they are now committed. So the one way you could do it, Glenn, that you can keep the land away from rapacious creditors, is never enter into any transactions wherein the land is pledged to repay such creditors.

MR. FREDERICKS: I like to

MR. FESSLER: You clearly could,

MR. FREDERICKS: Do you do that



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by lease agreement? What I'm saying is... now we're on the right track here, I think. If I took this land and if I wanted to make a business, say a thousand acres of timber, my idea was to go back to the membership and say I want to take a thousand acres and make it into a corporation profit -- profit corporation, can that be done?

MR. FESSLER: Certainly. Inother words, can the cooperative later on form a profit seeking corporation from the same individuals, the same beneficial owners form a profit seeking and convey assets from the cooperative to the profit seeking corporation, they can. In other words, you can have more than o.ne corporate entity and you can move assets around but at some point in the real world if you want to go out and borrow a million dollars and they say, "Well, what have you got?" You say, "Well, we don't have much of anything, because its all in the co-op." They'll say, "Well then, we'd like to speak to the officers of the co-op." And at some point you'll be backed into a corner and the people who have the ability to sign over the major assets wiLl be asked to do so; and at that point,I wouldn't want to leave you with the impression that the assetsjare insulated, they wouldn't be. And, you can't, as somebody said it earlier today.. .can you have it both ways...? Where the assets can be effectively used to leverage yourself into a cash liquidity situation.

MR. FREDERICKS: I'm very leeryof IRA's. Because of the federal government in the south. You take sovereignty question in the state of Alaska. I mean, we would have an uprise in the state of Alaska if we were given that immunity, and I, as a citizen of the United States, would go against that. What we want to done... that's what I'm saying how to protect this land. Maybe what we ought to be talking about is dealing with the federal government before it goes to court on the sovereignty questions. I mean, we have two hundred little villages out there going to be a nation. Now the State of Alaska



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cannot, in my mind, deal with this. All of a sudden, I'm from Georgetown, little town of thirty-five people. If I have a sovereign right, I can say to you, "You can come into my... I'm a sovereign nation." Well that's asinine, you know. That is absolutely asinine to me. Until that question is dealt with and clarified from Congress or from the courts, I'd be very hesitant to put my land into a IRA for that reason. Because Congress can pull that thing down on you, and what do you have? Nothing.

MR. BERGER: How do you feelabout IRA's, Professor Fessler?

MR. FESSLER: Well, I'll give youan idea of how stupid I was for the first five times I heard that; I thought you meant those individual retirement accounts that -- and there is a sense in which that's exactly what you mean. Only you are arriving at it through a very different mechanism. I don't know enough about the whole Indian Reorganization Act to begin talking.

MR. BERGER: Well, I thought thatin fact that we would come to that tomorrow, it's getting on toward four and I'd like to carry on this discussion this afternoon for a little while and then tomorrow, because I think it really is the guts of what everybody is concerned about....

(NOVEMBER 15, 1984)(OVERLAP TAPE)MR. BERGER: (Continued)...Rose

• Marie Maher and then Bart and then Roland.(NOVEMBER 15, 1984)(TAPE 8, SIDE A)MS. MAHER: The two resolutions

84-07 and 84-08, they refer to IRA's. There are not that many IRA's in the State of Alaska. And I don't know if the State recognizes traditional village councils or not. Does anybody have an answer to that?

MR. GARBER: They deal with them,

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and they've actually written them into their regulations and what not. So, I mean they recognize that the federal entity exists; they question sometimes the scope of its powers or the underlying common law that applies to it. Pardon me. Yeah, we've taken contracts with them, and there have been court -cases that say they have immunity, or that some others don't because they are not an IRA. or they don't have immunity in certain business transactions.

MR. BERGER: Could I just saysomething, Rose Marie? At this Roundtable, we are struggling with 1991, and protecting the land, and so on. We are having a Roundtable in December to discuss IRAs and. sovereignty because they are necessarily part of this thing and it seems to me you can't discuss one without discussing the other. So, I am more interested right, at the moment, in the attributes of IRA's as vehicles for holding land than I am about sovereignty itself; that's something we'll come to next month. I know they are mingled, and you can't talk about one without the talking about the other, but I think it's useful while we've got these people here to look at co-ops and non-profits and IRAs; and I should add that this Commission has been looking at any number of alternatives developed in other countries, because the list isn't just co-ops, non-profits and IRAs... but I interrupted you, you go ahead.

MS. MAHER: Well, most villagesthat are not organized under the IRAs do have traditional village councils. And I was curious to know what the problem would be with putting traditional village councils on this list that they have of non-profit or IRA.

MR. CASE: They are on the list.Do you mean the federal list of recognized... just resolutions... oh, I'm sorry, okay. I am not sure; maybe then Marlene should answer.

MS. M. JOHNSON: There is no



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problem with it. It say IRA non-profit or other entity and IRA just as common used thing in Alaska, and that's one of the major and there are quite a number of IRAs in the State of Alaska. Was used -- but we don't --maybe a new entity that hasn't even been dreamed up yet.

MS. MAHER: The reason I asked is'cause they've stopped any IRAs until the issues are settled between the federal and the state government. So, there may be some time before any new IRA's are issued.

MR. BERGER: So, In the meantime,the traditional council should serve, is that the point? Yes, that's what I'm saying.

MR. CASE: What was the question,the point you just made just then? It's getting confusing.

MR. BERGER: Well, Drew Hageman,I made the... I just said that traditional councils are on this list of Marlene's, that's all.

MR. CASE: But, I mean the pointthat should be made, too, about traditional councils and IRAs... the distinction, if any, between the two which seems to me to be -- correct me if I'm wrong -- it seems to me to be what you're asking, is that correct?

MS. MAHER: No, I was justcurious to why they weren't included in these two resolutions. They mention IRAs, but they don't mention traditional village councils and...

MR. CASE: One of the... perhapsone of the difficulties with traditional councils is that they don't exist on paper and so when it comes to a paper-oriented society and court system looking at these institutions and trying to figure out what they are, do they exist, what powers do they have? You may run into the difficulty that there is nothing on paper.that sort of acts as the proof. But as far as the law goes, or the theory of the law goes, there does not seem to be



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any material distinction and the important distinction between the powers of an IRA or thepowers of a traditional council. Now there are some distinctions because the IRA statute clarified or maybe confers some additional powers on IRA councils. And one of those powers may be that it relates to the protection of the land.

MR. HAGEMAN: I guess the... andpartially in response to your concern, Rose Marie, that I guess AFN Did indeed endorse a resolution that village tribal governments, not specifying IRAs or anything else -- village tribal governments were entitled to control and jurisdiction over their traditional territory. And, I guess as an opting, or if indeed it is an option, Marlene, what do we mean by traditional territory? Maybe I should, I'll ask that later, how is that?

MR. BERGER: Is that in thisresolution?

MR. HAGEMAN: It's anotherresolution, AFN resolution that was passed. The title is Village Tribal Government Control and Jurisdiction Over Traditional Territory. The resolution is that AFN does endorse the concept that each Native village tribal government is entitled to the control and jurisdiction over its traditional territory.

MR. BERGER: Oh, I see. Well,let's... that's another question that perhaps we can't settle here between now and four o'clock. But you might bear this in mind, that in the villages... in the hearings that I've held, people are concerned about protecting the land, and they have said, "Well, let's turn it over to co-op or non-profit." But of course the largest number say, "Well, let's turn it over to the IRA or the traditional council." But that isn't just, because they want a safe place for it. It became apparent to me that people regard those, the IRA and the traditional council, as the likely vehicles for exercising some measure of government authority over land and subsistence. So there is notion that it


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make sense to them to place the land for safe keeping with the same entity that is to have jurisdiction over it. Now, those are... that's where your resolution that you just read, it kind of... how do you go on from where we are at this point? But maybe tomorrow, if you don't mind, we could just, when we are a little fresher, take a look at these alternatives, and just see what protection they offer against the loss of the land, because if we restrict ourselves to that for the moment, we might be able to emerge with our mind clear on the subject.

Well, if you don't mind, I will suggest that in a moment we adjourn for the day because I think it's been a good discussion and a pretty intense one and I found, as a judge, judges usually sit in court only four hours a day,and we've been exceeding that here, that if you are paying attention and concentrating you are pretty well done all you can about this time of day. So, if we could carry on tomorrow from there and then go into the question of values because it seems to me that that's where we come out in the end, where Bart Garber got us into this yesterday. And so, if we could assemble again at nine o'clock or as soon thereafter as you can be here, we'll carry on with the discussion and see how far it get us.

Anything else anybody wants to say this afternoon?

(HEARING ADJOURNED) END OF TAPE 8, SIDE A



C E R T I F I C A T EUNITED STATES OF AMERICA )

) ss .STATE OF ALASKA )

I, Jenny V. Kearney, Notary Public in and for the state of Alaska, residing in Anchorage, Alaska, do hereby certify:

That the annexed and foregoing pages numbered 2090 through 2218 contain a full, true, correct and verbatim transcript of the proceedings in the matter of the Alaska Native Review Commission, Overview Roundtable Discussions, as transcribed by me to the best of my knowledge and ability from cassette tapes provided by the Alaska Native Review Commission.

That the original transcript has been retained by me for the purpose of filing the same with Don Gamble, Coordinator, Alaska Native Review Commission, 429 "D" Street, Suite 304, Anchorage, Alaska, as required by law.

I am not a relative, or employee, or attorney, or counsel to any of the parties, nor am I financially interested in this proceeding.

8APAPERWORKS330 E. 4th Ave., Suite 201


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